OSAKA -- The Financial Services Agency on Monday declared an Osaka-based mortgage-backed securities company insolvent, sending shock waves across the country as 20,000 investors saw their principals suddenly vanish.
Daiwa Toshi Kanzai was controlling 130 billion yen in investments, and its clients now have little chance of recovering that money; the principal in mortgage-backed securities is unprotected under the law.
Police were later called in to search offices and buildings related to the firm in Osaka, Tokyo, Hokkaido and six other prefectures; the FSA suspects one of its affiliates of illegally guaranteeing the principal of some investments.