Tweet
25 February 2012
AIJ Tokyo Asset Management: Billions In Customer Funds Are Missing
This is more Madoff than Corzine, but the song of unforeseen counterparty risk remains the same.
The Japanese regulators have decided to take a closer look to see how many more of the 299 asset management firms have funding problems like this.
Don't it always seem to go that you don't know what you've got 'til its gone?
John Kenneth Galbraith, The Great Crash of 1929
26 February 2012
Tokyo Based Hedge Fund AIJ May Have Lost/Stolen All Customer Pension Fund Money
Some of my friends in Japan are keeping an eye on this one for me, and I thank them for their help. I never learned to read Japanese beyond memorizing subway stations and street signs and the like, in addition to the usual polite conversational ability which has badly faded with the years.
The problem I have is finding good articles in English. The Japanese Shimbuns are also notoriously circumspect and it polite, even when it comes to institutional fraud.
While they keep talking about 'lost money' and 'hiding losses' it looks more like embezzlement on the surface for at least part of the funds. It appears that virtually all the customer money has 'vanished.'
It will be interesting to see which European bank received the customer money once it hit Hong Kong via the Cayman Islands.
AIJ Investment routed pension money to Cayman Islands
Fri Feb 24, 2012 1:11pm EST
Feb 25 (Reuters) - AIJ Investment Advisors Co is believed to have channeled about 200 billion yen ($2.48 billion) of corporate pension assets in custody into private investment trusts in the Cayman Islands, making it difficult to track the missing funds, the Nikkei said.
Japan's financial regulator on Friday temporarily shut AIJ on suspicion it may have hidden losses in the $2.6 billion pension funds it managed.
The Securities and Exchange Surveillance Commission (SESC) suspects that the Tokyo-based investment advisory firm may have used the tax haven to hide information on its investments. AIJ registered three investment trusts there, the Nikkei said.
Pending the results of the SESC's investigation, the Financial Services Agency plans to rescind AIJ's registration, the business daily said.
About 90 percent of the corporate pension assets managed by AIJ have disappeared, the daily said.
AIJ, after signing discretionary investment agreements with the corporate pension funds that worked with it, had the money put into the Cayman Islands investment trusts, the daily said.
AIJ is believed to have instructed that the money, once put into the investment trusts, be managed via a British-affiliated bank in Bermuda...
courtesy of http://jessescrossroadscafe.blogspot...-may-have.html
AIJ Tokyo Asset Management: Billions In Customer Funds Are Missing
This is more Madoff than Corzine, but the song of unforeseen counterparty risk remains the same.
The Japanese regulators have decided to take a closer look to see how many more of the 299 asset management firms have funding problems like this.
Don't it always seem to go that you don't know what you've got 'til its gone?
Wall Street Journal Japan
Missing Funds at AIJ: Watchdogging Japan
By Kana Inagaki and Phred Dvorak
February 24, 2012, 1:53 PM JST
The revelation that billions of dollars may have gone missing from client funds managed by a little-known Tokyo asset management firm highlights a sobering fact about Japanese financial regulation: It’s pretty spotty.
Japan’s financial watchdog Friday said investigators were looking into the alleged disappearance of “most of” the 183 billion yen, or about $2.3 billion, in pension-fund assets managed by AIJ Investment Advisors Co. Details are sketchy: regulators haven’t said exactly how much is supposedly lost, how many clients AIJ had, nor even whether they suspect foul play.
But we do know that if AIJ was doing anything wrong, the chances of its being caught out by Japan’s regulators were pretty slim.
Investment managers like AIJ are required to submit business reports to regulators once a year, Japan’s Financial Services Agency says. If those regulators suspect problems, they can carry out hearings. And some companies actually conduct voluntary audits of their own businesses. (AIJ was not one of them.)
A firm involved in dubious activity would need to be fairly unlucky to find itself caught in the net of one of the Securities and Exchange Surveillance Commission’s annual audits. The regulator conducted inspections of 15 investment managers in the year ended March 2011. Since there were 299 such firms in total, the chances of getting audited were about one in 20.
The FSA says it’s now going to do an audit of all 263 firms that have similar investment-management mandates to AIJ’s.
According to Japan’s Nikkei daily, AIJ may have misled clients for years, claiming they had cumulative returns as high as 240%.
It all makes for a fairly bleak spell for Japanese financial regulators. After all, the discovery of pension funds missing at AIJ comes only months after camera-maker Olympus Corp. admitted to it successfully hid more than $1.5 billion in losses for 13 years.
“To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in – or more precisely not in – the country’s business and banks. This inventory – it should perhaps be called the bezzle – amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly.”Missing Funds at AIJ: Watchdogging Japan
By Kana Inagaki and Phred Dvorak
February 24, 2012, 1:53 PM JST
The revelation that billions of dollars may have gone missing from client funds managed by a little-known Tokyo asset management firm highlights a sobering fact about Japanese financial regulation: It’s pretty spotty.
Japan’s financial watchdog Friday said investigators were looking into the alleged disappearance of “most of” the 183 billion yen, or about $2.3 billion, in pension-fund assets managed by AIJ Investment Advisors Co. Details are sketchy: regulators haven’t said exactly how much is supposedly lost, how many clients AIJ had, nor even whether they suspect foul play.
But we do know that if AIJ was doing anything wrong, the chances of its being caught out by Japan’s regulators were pretty slim.
Investment managers like AIJ are required to submit business reports to regulators once a year, Japan’s Financial Services Agency says. If those regulators suspect problems, they can carry out hearings. And some companies actually conduct voluntary audits of their own businesses. (AIJ was not one of them.)
A firm involved in dubious activity would need to be fairly unlucky to find itself caught in the net of one of the Securities and Exchange Surveillance Commission’s annual audits. The regulator conducted inspections of 15 investment managers in the year ended March 2011. Since there were 299 such firms in total, the chances of getting audited were about one in 20.
The FSA says it’s now going to do an audit of all 263 firms that have similar investment-management mandates to AIJ’s.
According to Japan’s Nikkei daily, AIJ may have misled clients for years, claiming they had cumulative returns as high as 240%.
It all makes for a fairly bleak spell for Japanese financial regulators. After all, the discovery of pension funds missing at AIJ comes only months after camera-maker Olympus Corp. admitted to it successfully hid more than $1.5 billion in losses for 13 years.
John Kenneth Galbraith, The Great Crash of 1929
26 February 2012
Tokyo Based Hedge Fund AIJ May Have Lost/Stolen All Customer Pension Fund Money
Some of my friends in Japan are keeping an eye on this one for me, and I thank them for their help. I never learned to read Japanese beyond memorizing subway stations and street signs and the like, in addition to the usual polite conversational ability which has badly faded with the years.
The problem I have is finding good articles in English. The Japanese Shimbuns are also notoriously circumspect and it polite, even when it comes to institutional fraud.
While they keep talking about 'lost money' and 'hiding losses' it looks more like embezzlement on the surface for at least part of the funds. It appears that virtually all the customer money has 'vanished.'
It will be interesting to see which European bank received the customer money once it hit Hong Kong via the Cayman Islands.
Bloomberg
AIJ Suspension Undermines Japan Pensions Hedge Fund Appetite
By Tomoko Yamazaki and Komaki Ito
February 26, 2012, 11:10 AM EST
Feb. 27 (Bloomberg) -- The suspension of AIJ Investment Advisors Co.’s operations amid concerns hedge funds it manages had lost pension money may undermine plans by Japan’s retirement funds to boost returns to meet demand in an aging society.
The Financial Services Agency on Feb. 24 ordered the Tokyo- based firm with 183.2 billion yen ($2.3 billion) of client money to stop business for a month as the regulator investigates “possible losses” at AIJ’s hedge funds. The FSA also will undertake a nationwide probe of 263 asset managers.
“If the funds actually suffered losses, this could potentially have a massive impact on pension plans that actually invested with them,” said Taro Ogai, who oversees consulting for pension fund investments at Towers Watson in Tokyo. “Pensions already face difficulties. At a time when they are trying to boost returns and cut risks, investing in hedge funds may become difficult for them.”
The inquiry is a setback for Japan’s pension industry that has been looking to diversify away from bonds and equities into alternatives investments, including hedge funds, to maintain steady returns and fund retiree benefits in a country with the world’s fastest-growing aging society and two decades of slumping markets...
Regulators have been investigating AIJ, which invests in futures and options of equities and bonds, since the end of January, and discovered that the company has been unable to explain to investors the current state of the way their money is being managed, according to the FSA...
AIJ’s funds have been traced from Japan to the Cayman Islands, followed by a trust bank in Bermuda and ultimately to “a major European Bank” in Hong Kong, the Asahi newspaper said Feb. 25, citing an investigation by Japan’s Securities and Exchange Surveillance Commission. AIJ kept money-flow records up to the unidentified bank in Hong Kong and no further records have been found, the newspaper said...
AIJ may have lost most of the 200 billion yen it manages for companies’ pension plans, the Nikkei newspaper reported Feb. 24, citing unidentified securities investigators...
Japan’s financial regulator is also planning to investigate trust banks that handle pension money as well as corporate pensions, the Nikkei newspaper reported over the weekend. The regulator penalized at least 35 financial institutions last year including Citigroup Inc. and UBS AG for breaching securities rules, according to its website...
AIJ, led by Kazuhiko Asakawa, was established in April 1989, and had 120 clients including pension plans with 183.2 billion yen in assets as of the end of 2010, according to a statement from the FSA. It has 12 employees. Phone calls to AIJ’s main office were answered by an automatic recording which didn’t allow messages to be recorded. Asakawa was a former employee at Nomura Holdings Inc., according to a person familiar with his employment. Keiko Sugai, a Tokyo-based spokeswoman at Nomura, declined to comment...
AIJ’s fund was ranked top among pension funds in 2008, said Fujio Nakatsuka, a spokesman at Rating & Investment Information Inc. in Tokyo. He said the rankings were based on responses from pensions and not what R&I had recommended to investors...
ReutersAIJ Suspension Undermines Japan Pensions Hedge Fund Appetite
By Tomoko Yamazaki and Komaki Ito
February 26, 2012, 11:10 AM EST
Feb. 27 (Bloomberg) -- The suspension of AIJ Investment Advisors Co.’s operations amid concerns hedge funds it manages had lost pension money may undermine plans by Japan’s retirement funds to boost returns to meet demand in an aging society.
The Financial Services Agency on Feb. 24 ordered the Tokyo- based firm with 183.2 billion yen ($2.3 billion) of client money to stop business for a month as the regulator investigates “possible losses” at AIJ’s hedge funds. The FSA also will undertake a nationwide probe of 263 asset managers.
“If the funds actually suffered losses, this could potentially have a massive impact on pension plans that actually invested with them,” said Taro Ogai, who oversees consulting for pension fund investments at Towers Watson in Tokyo. “Pensions already face difficulties. At a time when they are trying to boost returns and cut risks, investing in hedge funds may become difficult for them.”
The inquiry is a setback for Japan’s pension industry that has been looking to diversify away from bonds and equities into alternatives investments, including hedge funds, to maintain steady returns and fund retiree benefits in a country with the world’s fastest-growing aging society and two decades of slumping markets...
Regulators have been investigating AIJ, which invests in futures and options of equities and bonds, since the end of January, and discovered that the company has been unable to explain to investors the current state of the way their money is being managed, according to the FSA...
AIJ’s funds have been traced from Japan to the Cayman Islands, followed by a trust bank in Bermuda and ultimately to “a major European Bank” in Hong Kong, the Asahi newspaper said Feb. 25, citing an investigation by Japan’s Securities and Exchange Surveillance Commission. AIJ kept money-flow records up to the unidentified bank in Hong Kong and no further records have been found, the newspaper said...
AIJ may have lost most of the 200 billion yen it manages for companies’ pension plans, the Nikkei newspaper reported Feb. 24, citing unidentified securities investigators...
Japan’s financial regulator is also planning to investigate trust banks that handle pension money as well as corporate pensions, the Nikkei newspaper reported over the weekend. The regulator penalized at least 35 financial institutions last year including Citigroup Inc. and UBS AG for breaching securities rules, according to its website...
AIJ, led by Kazuhiko Asakawa, was established in April 1989, and had 120 clients including pension plans with 183.2 billion yen in assets as of the end of 2010, according to a statement from the FSA. It has 12 employees. Phone calls to AIJ’s main office were answered by an automatic recording which didn’t allow messages to be recorded. Asakawa was a former employee at Nomura Holdings Inc., according to a person familiar with his employment. Keiko Sugai, a Tokyo-based spokeswoman at Nomura, declined to comment...
AIJ’s fund was ranked top among pension funds in 2008, said Fujio Nakatsuka, a spokesman at Rating & Investment Information Inc. in Tokyo. He said the rankings were based on responses from pensions and not what R&I had recommended to investors...
AIJ Investment routed pension money to Cayman Islands
Fri Feb 24, 2012 1:11pm EST
Feb 25 (Reuters) - AIJ Investment Advisors Co is believed to have channeled about 200 billion yen ($2.48 billion) of corporate pension assets in custody into private investment trusts in the Cayman Islands, making it difficult to track the missing funds, the Nikkei said.
Japan's financial regulator on Friday temporarily shut AIJ on suspicion it may have hidden losses in the $2.6 billion pension funds it managed.
The Securities and Exchange Surveillance Commission (SESC) suspects that the Tokyo-based investment advisory firm may have used the tax haven to hide information on its investments. AIJ registered three investment trusts there, the Nikkei said.
Pending the results of the SESC's investigation, the Financial Services Agency plans to rescind AIJ's registration, the business daily said.
About 90 percent of the corporate pension assets managed by AIJ have disappeared, the daily said.
AIJ, after signing discretionary investment agreements with the corporate pension funds that worked with it, had the money put into the Cayman Islands investment trusts, the daily said.
AIJ is believed to have instructed that the money, once put into the investment trusts, be managed via a British-affiliated bank in Bermuda...
courtesy of http://jessescrossroadscafe.blogspot...-may-have.html
Comment