Japan Shuts AIJ Investment to Protect Clients

Japan’s financial regulator ordered AIJ Investment Advisors Co. to halt its business after finding the asset manager’s clients funds of about 183.2 billion yen ($2.3 billion) may be “adversely affected” and started a probe into the 263 asset managers operating in the nation.

“We’ve ordered AIJ to halt business for a month in order to safeguard investors, as it appears client assets have been adversely affected,” Financial Services Minister Shozaburo Jimi told reporters at a briefing in Tokyo. The regulator is still investigating the firm and can’t comment on losses. The suspension lasts from today until March 23, the regulator said.

AIJ, a Tokyo-based asset-management firm, may have lost most of the 200 billion yen ($2.5 billion) it manages for companies’ pension plans, the Nikkei newspaper said today, citing unidentified securities investigators. Regulators have been investigating AIJ since the end of January and are unable to explain where some money went, the Nikkei reported.

Japanese pension plans have been suffering from two decades of slumping markets and an aging population. Alternative investments were becoming one of the options for the retirement funds, which have traditionally invested mainly in bonds, as ways to maintain steady returns and fund retiree benefits in a country where more than one in five people are over 65.

Photographer: Haruyoshi Yamaguchi/Bloomberg

Japanese Financial Services Minister Shozaburo Jimi. Close

Japanese Financial Services Minister Shozaburo Jimi.

Photographer: Haruyoshi Yamaguchi/Bloomberg

Japanese Financial Services Minister Shozaburo Jimi.

AIJ, led by Kazuhiko Asakawa, was established in April 1989, and had 120 clients including pension plans with 183.2 billion yen in assets as of the end of 2010, according to a statement from the Financial Services Agency, adding it has 12 employees.

A phone call to AIJ’s main office was answered by an automatic recording which didn’t allow messages to be kept.

Advantest, Yaskawa Electric

Retirement funds of companies including Advantest Corp. (6857) and Yaskawa Electric Corp. (6506) are among those that invested in AIJ’s fund, the Nikkei said. Advantest fell 1.5 percent to 1,092 yen at the 11:30 a.m. break on the Tokyo Stock Exchange, compared with a less than 0.1 percent gain in the Nikkei 225 Stock Average. Yaskawa Electric declined 1.5 percent to 784 yen.

Advantest, a maker of memory-chip testers, said it’s a customer of AIJ, adding that it is not fully aware of details of the Nikkei report, according to its statement through the stock exchange. Yaskawa Electric has about 2 percent of its pension money managed by AIJ and the impact will be limited, said Ayumi Hayashida, a spokesman at the company.

To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net; Shingo Kawamoto in Tokyo at skawamoto2@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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