BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Investments - Private
- Features/Scandals
- Companies
- Technology/Internet
- Rules & Regulations
- Crimes
- Investments
- Bad Advisors
- Boiler Rooms
- Hirings/Transitions
- Terminations/Cost Cutting
- Regulators
- Wall Street News
- General News
- Donald Trump & Co.
- Lawsuits/Arbitrations
- Regulatory Sanctions
- Big Banks
- People
TRENDING TAGS
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
ABOUT FINANCIALISH
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
SUBSCRIBE FOR
NEWSLETTERS & ALERTS
FOLLOW US
Japan's Mini-Madoff Caught
February 28, 2012
[ by Melanie Gretchen ]
In 2009, an industry newsletter flagged a small Japanese asset-management firm as the "Japanese Madoff" - but of course, no one took those rants and claims seriously, at least not back in 2009. Three years later, regulators halted the firm's operations, but only after the Madoff-wannabe allegedly had Ponzi'd investors out of most of their ¥183 billion - the equivalent of $2.3 billion - in pension assets under management.
Warning Signs. Rating & Investment Information published in a 2009 newsletter that AIJ Investment Advisors had "unnaturally stable returns," despite a down market. Although the firm wasn't named, a description was enough to identify it for most pension-industry experts, Hidekazu Nagamori, the managing director in charge of the newsletter, said. Founded in 1989, AIJ sells its asset-management services largely to pension funds of small and mid-size Japanese companies.
Only a year prior, AIJ, which has a staff of 12 employees, was ranked No. 1 by Japanese pension funds in a customer-satisfaction survey conducted by R&I. According to bankers familiar with the investment industry, AIJ was known among bigger asset managers for boasting consistently high returns.
Of 2009, Mr. Nagamori said R&I became concerned about AIJ after hearing its pension-fund clients discuss AIJ's decade-long track record of reporting higher-than-average returns, regardless of the market conditions. Between 2009 and 2011, AIJ claimed its 3 investment funds generated annual returns of around 5% to 10%, according to reports shown to R&I by multiple pension-fund clients, Mr. Nagamori - an exception, considering few Japanese investment managers had reported 3 consecutive years of positive returns.
In addition, he discussed his concerns with Japanese financial regulators.
Financial Regulation. The Financial Services Agency, Japan's financial watchdog, said it couldn't comment on whether it was aware of concerns about AIJ as long as 3 years ago. One official said the agency has had limited means to check up on investment managers after the number of firms increased after a relaxation of criteria for registering in 2007. Going forward, it will check all 263 of the asset managers similar to AIJ.
AIJ is cooperating with authorities and has informed its clients about the FSA suspension of business by fax at the end of last week. In a filing with the Japan Securities Investment Advisers Association, it attributed the steadiness of positive returns to an investment strategy centered on shorting Nikkei 225 options and arbitrage trades in equity and bond derivatives.
"People in the industry had wondered about the company - they'd always thought something was shady," Mr. Nagamori said.
For further details go to [WSJ, 2/25/12].
Related Stories: Archive
-
Legal Funding Firm Accused of Scamming 9/11 Heroes, NFL Retirees
February 8, 2017 -
Elizabeth Warren, Wall Street Pariah, Now Has Lost Her Left-Wing Following
January 19, 2017 -
What We Know and Don’t Know About the Trump-Russia Dossier
January 11, 2017