Japan's securities watchdog Friday raided the head office of a Tokyo investment company accused of losing $1.3 billion of pension funds' money after exaggerating its performance to attract clients. Investigators from the Securities and Exchange Surveillance Commission searched AIJ Investment Advisors' head office.
AIJ has reportedly lied to clients for years, boasting of annual returns of up to 240 percent and exaggerating its investment performance when striking deals with corporate pension funds. The scandal has shocked Japan, where a rapidly ageing population is increasingly looking to private pension funds as state schemes struggle due to mismanagement.
"It is extremely regrettable," Financial Services Minister Shozaburo Jimi told a news conference, adding that he accepted criticism over the government's failure to detect the alleged malpractice. The watchdog said AIJ had incurred 109.2 billion yen ($1.3 billion) in investment losses after accepting 145.8 billion yen in assets from pension funds.
AIJ now has only 8.1 billion yen in cash and deposits, the commission said. AIJ's operations were suspended in February when the scandal surfaced and the government ordered a probe of 260 asset management firms nationwide after allegations that most of the money in the company's care had disappeared.
The securities commission is looking into the possibility of filing a criminal complaint against AIJ, media reports said. Jimi's Financial Services Agency on Friday stripped AIJ of its registration as an investment adviser and ordered its affiliate, ITM Securities, to suspend operations for six months.