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Japan Strips Registration of U.S. Fund Manager MRI

April 26 (Bloomberg) -- Japan’s finance regulator stripped U.S. asset-management company MRI International Inc. of its registration to operate in the country, saying it falsified business reports.

MRI also failed to manage assets from 2011, the Financial Services Agency said today in a statement. Japan’s Securities and Exchange Surveillance Commission conducted a joint investigation of Las Vegas-based MRI with U.S. counterparts, an SESC official said, asking not to be named in accordance with the commission policy.

The firm failed to separate assets collected from clients from funds used to pay investment returns, according to the regulator. The probe comes a year after Japan conducted the biggest investigation of the country’s assets managers amid allegations of fraud at AIJ Investment Advisors Co. AIJ, a Tokyo-based investment company, was found to have concealed losing more than 100 billion yen ($1 billion) of clients’ money.

The Nikkei newspaper earlier reported as much as 130 billion yen of MRI client’s funds may be missing, without citing sources. The SESC has yet to identify MRI’s asset balance and the amount of money that the company may have lost, the official said, adding that the firm’s inaccurate reports made it difficult to track the money flow.

Calls to MRI’s Tokyo office prior to the regulator’s announcement were transferred to an answering machine saying it will “deliver letters to clients in due course.” The office had a notice posted on its entrance saying business is closed today. Nobody answered the door this morning.

MRI, founded in 1998, sells investment products that are related to the rights to collect medical service fees, according to its website. The products offer an annual return of as high as 8.5 percent, according to its Japanese website.

MRI has collected 136.5 billion yen of assets from about 8,700 retail investors in Japan, according to the Nikkei report.

To contact the reporters on this story: Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net; Shigeru Sato in Tokyo at ssato10@bloomberg.net

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net

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