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Finance

Former AIJ heads into bankruptcy over retirement assets

TOKYO -- Bankruptcy proceedings are set to begin for the former AIJ Investment Advisors, the Tokyo firm that became infamous nearly four years ago for losing tens of billions of yen in individuals' retirement savings.

     The company now known as MARU goes down as the biggest Japanese bankruptcy case so far this year, with 131.3 billion yen ($1.07 billion) in liabilities, according to Tokyo Shoko Research. At least 100 billion yen of the pension assets for which AIJ was responsible -- much of it invested on behalf of umbrella plans for groups of small and midsize businesses -- appears uncollectible.

     The Tokyo District Court on Wednesday approved a bankruptcy petition for MARU filed by six trust banks serving as custodians for the assets. Creditors have until Jan. 20 to file claims. A meeting of creditors is set for May 18.

     In February 2012, AIJ was found unable to account for the bulk of 150 billion yen in client assets. Some 880,000 stood to lose money. Only about 8.5 billion yen had been collected as of 2013.

     Despite years of investment losses, AIJ continued to lure new clients with bogus claims of market-beating returns. The situation went from bad to worse after the 2008 Lehman Brothers collapse, which sunk the value of its derivatives positions.

     In 2013, the Tokyo District Court sentenced AIJ President Kazuhiko Asakawa to 15 years in prison for fraud and financial-products law violations. Asakawa sought unsuccessfully to have the conviction overturned by the Tokyo High Court. He appealed to the Supreme Court in March.

     MARU continues to occupy AIJ's former offices in Tokyo's Chuo Ward. Stripped of its registration as an investment adviser, it ostensibly offers staffing, management consulting and other services. The court-appointed bankruptcy administrator cannot confirm whether it is actually engaged in any of these businesses.

(Nikkei)

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