MUFG Brokerage Dropped as Debt Underwriter on Probe Report

(Bloomberg) -- Mitsubishi UFJ Financial Group Inc.’s investment banking venture with Morgan Stanley lost at least two bond deals in Japan after it was reported to be facing potential penalties for sharing client information.

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Kanagawa Prefecture and Japan Housing Finance Agency decided to drop Mitsubishi UFJ Morgan Stanley Securities Co. from arranging their bond and residential mortgage-backed securities deals respectively, according to the issuers.

Japan’s securities commission will recommend to the Financial Services Agency on Friday that disciplinary action be taken against MUFG Bank Ltd. and two brokerage units, Kyodo reported Thursday, citing a person familiar with the matter.

NEC Corp. is discussing the option of removing MUMSS as underwriter for a planned yen sustainability-linked bond sale, according to a spokesman.

Japan Housing Finance made the decision after MUMSS contacted the issuer about the matter, according to Misuzu Nakata, a spokeswoman at the agency. Kanagawa Prefecture decided to replace the securities firm as news that it may face penalties from regulators falls under provisions for revocation of lead manager status, said Sho Shirai, an official at its finance division.

MUMSS spokesperson Yasuyuki Kakinuma declined to comment on specific cases.

(Updates with Kyodo report in third paragraph.)

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