Several hundred million yen deposited by investors in financial products sold by the head of the now-defunct Minami Securities in the late 1990s are unaccounted for, and police suspect fraud, investigation sources said Wednesday.
Koichi Hirata, 37, former president of the Maebashi, Gunma Prefecture-based brokerage, has been arrested and charged with embezzling client stocks worth billions of yen.
Around 1998, Hirata set up an unlicensed investment advisory company and began selling investment trust products that promised high yields, according to the sources close the Metropolitan Police Department probe into the case.
The investment consultancy was named Goose and Gridiron and was based in New York. Hirata claimed to be the president of its Japanese branch, although G&G in fact was a dormant company with no substantial activity, the sources said.
Hirata started selling Emerging Japan Fund and Mini Bond products that promised annual yields of 4.8 percent to 6.8 percent, attracting hundreds of investors.
Although some of the money deposited from the investors was returned, a major part of the funds remain unaccounted for, the sources said.
According to a private-sector credit rating agency, G&G was declared bankrupt together with its affiliates in June 2000 with liabilities totaling 3 billion yen.
In 1998, the then Financial Supervisory Agency issued a warning to G&G not to sell financial products that could mislead investors. G&G was not officially registered as a provider of investment trusts.