Japan’s financial watchdog has asked the U.S. Securities and Exchange Commission to provide information it needs to file a criminal complaint against the head of a Nevada-based asset manager suspected of swindling investors out of billions of yen, market sources said.
The Securities and Exchange Surveillance Commission aims to file a complaint against Edwin Yoshihiro Fujinaga, head of MRI International Inc., which is suspected of losing more than ¥130 billion of its clients’ money.
The SESC raided the Tokyo office of MRI and other locations in April in connection with the case, but has not been able to interview Fujinaga, who lives in the United States.
Fujinaga told the SESC in April through statements from the U.S. that MRI burned through most of its clients’ assets.
It is rare for authorities in Japan to build a case against someone abroad, but if the flow of funds at MRI can be identified via SEC documents, it may be able to build a case against Fujinaga.
The SESC has apparently concluded it is necessary to check the MRI’s money flow to get a better picture of the alleged fraud, the sources said.
Since the watchdog is not authorized to collect data abroad, it needs the SEC’s cooperation based on a pact stipulating that market monitoring authorities in each country are allowed to exchange information. The SESC said the SEC is likely to cooperate.
Earlier reports said some MRI clients and other parties claimed they were falsely told their funds would be protected in a special account under U.S. banking laws. MRI’s brochures state the funds were to be deposited into a “lock box account” at Wells Fargo where it will be safe as it can only be used to trade a securitization product known as MARS that is based on medical institutions’ claims on insurers.
As of the end of last year, MRI, which began selling financial products in Japan in 1998, said it had been entrusted with ¥130 billion in funds from around 8,700 clients. It was de-registered in April as a fund manager after the losses came to light.