DaVinci Unit Suspended for Overstating Asset Values

KK DaVinci Advisors, which runs Japan's biggest private real estate fund, was today ordered by regulators to suspend some business at a subsidiary for three months because it overstated the value of assets put into a trust.

The Securities and Exchange Surveillance Commission recommended on Feb. 14 that the Financial Services Agency penalize DaVinci Select K.K. The subsidiary manages a real estate investment trust, DA Office Investment Corp., which is listed on the Tokyo Stock Exchange.

Japan's financial regulator is more frequently penalizing financial firms that break rules, after switching focus to investor protection and away from helping the nation's banks to recover. Nikko Cordial Corp., Japan's third-largest broker and Citigroup Inc.'s investment banking partner, was fined a record 500 million yen ($4.2 million) in January for inflating earnings.

The main unit of Millea Holdings Inc., the country's biggest insurer, and rival non-life firms may be penalized for failing to pay claims in full, state-run broadcaster NHK said earlier today.

Shares of DaVinci Advisors fell 4.4 percent to 130,000 yen in Tokyo today. The stock tumbled 14 percent on Feb. 15, its largest decline in more than a year.

DaVinci Advisors' 1 Trillion Yen Fund paid $1.7 billion to Richard Li, son of Chinese billionaire Li Kai-shing, to acquire the office space of central Tokyo's Pacific Century Place development in September.

To contact the reporter on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net

To contact the editor responsible for this story: Ben Richardson in Hong Kong at brichardson8@bloomberg.net.

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