Japan’s financial regulator is probing the sales of Credit Suisse’s AT bonds in the country, highlighting concerns about potentially deficient explanations.
The Financial Services Agency (FSA) of Japan is probing what kind of explanations about potential losses from Credit Suisse’s AT1 bonds were given by brokerages to buyers before the demise of the Swiss bank, according to a «Bloomberg» (behind paywall) report. This includes whether or not investors were aware of the possibility of a write-down to zero.
«If it was not properly explained that they could default, it would be a problem,» said FSA commissioner Teruhisa Kurita. «It’s important that customers understand well. It’s not [all right] to just have explanations written on the documents.»
Safer Than Stock
According to Kurita, one of the complaints involves claims that Credit Suisse’s AT1 bonds were safer than stock, in response to a customer inquiry around the fall of last year when there were market concerns about the bank’s health.
Japanese investors bought around 140 billion yen ($1 billion) of Credit Suisse’s AT1 bonds, with clients of Mitsubishi UFJ Financial Group and Morgan Stanley’s securities venture accounting for the bulk of losses. Recently, local online brokerage Monex was also reportedly sued for the alleged lack of explanations about the risky debt's unique viability risks.
