Japan Investment Firm Shut Down Over Lost Funds
Japan’s Financial Services Agency, a financial sector watchdog, ordered an investment firm on Friday to halt operations, fearing that it has lost the majority of the $2.3 billion it manages. AIJ Investment Advisors, which manages pension funds for more than 100 major companies, was ordered to suspend all operations for a month while regulators conduct a probe into allegations that the firm has been covering losses up for years.
The news has taken analysts and the industry as a whole by surprise, and the FSA said it will work diligently with other officials to make sure this kind of financial catastrophe does not happen again in the future. The agency also noted that it will take a closer look at all other investment firms in Japan to ensure that the practices used at AIJ were not rampant.
The immense scope of the amount of money missing has some economists scratching their heads, amazed that the firm was able to hide it. Analysts said that regulators should have had accounting firms checking out AIJ’s balance sheets. According to a source familiar with the allegations against AIJ, the firm was publishing fraudulent reports on how and where their funds had been invested.