Japan Watchdog Probes Societe Generale on Nagano Fund

(Corrects to remove companies’ association with AIJ. This story was first published on Oct. 7.)

Japanese financial regulators plan to punish three companies suspected of negligent management of a Nagano prefecture pension fund, the Nikkei newspaper reported today.

The Financial Services Agency may impose punishment on Societe Generale Private Banking Japan (GLE), Stats Investment Management Co. and United Investments Co., the Nikkei reported, without saying where it received the information. The three companies had managed investments for the Nagano fund, which AIJ Investment Advisors Co. is suspected of defrauding, the Nikkei said.

Calls by Bloomberg News to the FSA and United Investments to confirm the report were not answered.

Tatsuya Yamashita, Stats’ chief executive officer, confirmed by telephone that the company was being examined. Yamashita denied any malicious practice, saying the fund’s biggest losses were made before Stats signed a fund management contract in December 2009.

Nathalie Pujolle, a spokeswoman for Societe Generale Private Banking in Tokyo, wrote in an e-mail to Bloomberg News that the bank is not being investigated in matters related to the AIJ scandal, adding that the bank is unable to comment further.

AIJ President Kazuhiko Asakawa was arrested in June on suspicion of defrauding pension funds in Tokyo and Nagano prefectures of about 7 billion yen ($89 million). The commission found the firm lost 109.2 billion yen from derivatives trades directed by Asakawa over nine years, in a scandal that has raised concerns about the safety of retirement assets in the world’s fastest-aging nation.

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To contact the reporter on this story: Andy Sharp in Tokyo at asharp5@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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