Three Japanese companies have dropped Mitsubishi UFJ Morgan Stanley Securities Co. Ltd. as an underwriter for their bond issuances amid market manipulation allegations, The Nikkei reported July 3.

Toray Industries Inc., KDDI Corp. and Tokyo Gas Co. Ltd. dropped the securities company as an underwriter for their bond issuances totaling about ¥150 billion scheduled for July.

This comes after the country's Securities and Exchange Surveillance Commission recommended that the Financial Services Agency impose a ¥218.4 million penalty on the company following an investigation.

According to the regulator, Mitsubishi UFJ Morgan Stanley Securities on Aug. 25, 2017, placed orders for 10-year Japanese government bond futures without intending to execute them.

Toray Industries is looking to issue up to ¥100 billion of bonds. KDDI will issue around ¥30 billion of bonds, while Tokyo Gas is set to issue about ¥10 billion of bonds.

Mitsubishi UFJ Morgan Stanley Securities said it is taking the matter seriously and is working to regain trust, the report added.

Mitsubishi UFJ Morgan Stanley is a joint venture between Mitsubishi UFJ Financial Group Inc. and Morgan Stanley.

As of July 2, US$1 was equivalent to ¥110.78.