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Friday
Oct122012

More AIJ related fallout in Japan

The Japanese FSA decided to issue business suspension orders to a trust bank and fund advisory, due to failure to perform obligation in fund management - On 12 October 2012, Nikkei Newspaper reported that the FSA is going to issue business suspension orders to United Investment Trust Investment Advisory and Stutz Investment Management who were entrusted to manage funds from Nagano Prefecture Construction Industry Pension Fund (“NPCIPF”).  

NPCIPF suffered heavy losses from investments in unlisted shares which were managed by above two companies, following a separate loss in investment to AIJ Advisory.  The FSA reportedly took the view that the two companies failed to perform an obligation to properly inspect their investments in unlisted shares and thus violated the FIEA.  The two companies entered into consignment agreements with another investment company under the direction of NPCIPF and they had been diverted assets in unlisted shares of that other investment company’s choice.  The total fund invested by NPCIPF had been eroded from about JP 7 billion yen to JP 2 billion yen.  It was not a scam, such as the case in AIJ Advisory, but the two companies had failed to ensure appropriateness of investment destinations.  Additionally it was reported that the FSA is considering some administrative sanctions, including suspension of a part of business, to Societe Generale Trust Bank, who was also entrusted to manage assets from NPCIPF, due to a failure to perform management obligation under the Trust Business Act.  

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