The Securities and Exchange Surveillance Commission plans to launch an investigation into AIJ Investment Advisors Co. by the end of the week in hopes of determining what happened to billions of yen in client pension money it apparently squandered, sources said Saturday.
The regulators allege the Tokyo-based investment company broke a law on trading financial products by falsifying its performance reports to lure in corporate pension funds.
The investigation is expected to be conducted independently of the Tokyo District Public Prosecutor's Office and Tokyo police, both of which are also investigating the matter.
The beleaguered securities watchdog is expected to plunge into the nation's worst corporate scandal since the Olympus accounting debacle to determine where massive amounts of pension money AIJ was entrusted to invest ended up. The investigation will be carried out with a view to filing a criminal complaint with relevant authorities.
AIJ is alleged to have given false explanations to clients about its investment performance, such as by saying it earned unusually high yields in a stable manner, to persuade companies to become its clients even though it was really losing money hand over fist, according to the sources and materials prepared by the firm.
AIJ invested all of the roughly ¥200 billion ($2.4 billion) in pension assets under its care in private investment trusts set up in the Cayman Islands, a British territory and tax haven.
But AIJ allegedly lost some 90 percent of the money.
If true, its clients, mostly corporate pension funds, will have to deal with the loss by raising contributions or reducing benefits.