National / Crime & Legal

School group Nanzan sues UBS, Nomura over derivatives trading losses

Bloomberg

UBS AG and Nomura Holdings Inc. have been sued by a Japanese school operator for ¥8.8 billion in compensation for losses on derivative transactions.

Nanzan School Corp. sued in the Tokyo District Court, the Nagoya-based company said Thursday in a statement on its website. It is seeking ¥6.7 billion from UBS’s Japanese brokerage unit and ¥2.1 billion from Nomura Securities Co., arguing that the companies failed to explain risks of the transactions.

The school operator is among Japanese companies and universities that lost money investing in structured products during the global financial crisis that triggered the bankruptcy of Lehman Brothers Holdings Inc. in 2008.

Nanzan lost ¥22.9 billion from derivative transactions with six brokerages, including UBS and Nomura, from 2005 to 2012, Okajima said.

The products included swaps tied to currencies, interest rates, and collateralized debt obligations. The company had two transactions with UBS from 2006 to 2011 and 11 with Nomura from 2006 to 2012, he said.

UBS will contest the action in court, said Eiko Noda, a Tokyo-based spokeswoman for the Swiss bank. Kenji Yamashita, a spokesman for Nomura in Tokyo, declined to comment.

The operator of Nanzan University is investigating the transactions with other brokerages and will decide whether to file lawsuits against them, it said in the statement, without identifying the firms.

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