AIJ: Japan Regulators Look Overseas for Rest of ¥200 Billion in Missing Customer Pension Funds

So far they have found about ¥20 Billion in the local Japanese accounts. The rest is 'missing.'

Word has it that AIJ lost the money trading futures. Should have gone to Vegas.

A list of 36 of the 84 pension funds who lost money is now available.   The rest declined to be identified for fear of stirring up 'public unrest.'  

These pensioners are apparently a cranky lot.

Since the Japan press seems to think the money was 'burned through,' perhaps they should look for the vapor trails like the MF Global team is doing.

Hong Kong and the Cayman Islands are prime destinations in their own right, but I will be surprised if a big western financial firm is not involved here somewhere.

The Japan Times
AIJ likely lost pension funds trading futures
March 2, 2012
AIJ Investment Advisors Co. used clients' corporate pension money to conduct futures trading in Japan, after first transferring the money to the Cayman Islands and Hong Kong, sources said.

The details offer clues on how the suspended asset manager allegedly burned through most of what is now believed to be ¥210 billion entrusted to it by 84 employee pension funds covering more than 880,000 people as of the end of 2011.

In a related development Thursday, the Health, Labor and Welfare Ministry published the names of 36 of the 84 corporate pension funds damaged by AIJ after they agreed to be publicly identified.

The others refused on the grounds that disclosure might fuel public "unrest."

Those that lost money include software developer SCSK Corp., Cosmo Oil Co., Nihon Unisys Ltd., Lion Corp., Dai Nippon Printing Co. and Fuji Electric Co.

Wall Street Journal
Japan Looks Abroad for AIJ Funds
By KANA INAGAKI
March 1, 2012, 11:40 a.m.

TOKYO—Japanese regulators plan to ask Hong Kong and other overseas authorities for help as they try to track down nearly $2.5 billion in allegedly missing pension funds, according to a person familiar with the matter.

The Securities and Exchange Surveillance Commission is looking at whether AIJ Investment Advisors Co., a little-known Tokyo asset-management firm, channeled pension money it managed into private investment trusts in the Cayman Islands, the person said. Accounts may also have been set up with financial institutions in Bermuda and Hong Kong, the person added.

While such moves wouldn't violate Japanese rules, regulators need the help to check on overseas accounts.

Japan's Financial Services Agency suspended AIJ's operations last week, saying the firm can't account for most of the money it managed...

AIJ has told regulators that it believes about 90% of the roughly ¥200 billion in pension assets that it managed is gone, and only around ¥20 billion remain, the person familiar with the matter said...

Israeli Central Bank to Use Its Reserves to Buy US Equities

Not even bonds yet, but stocks?

It makes sense that some Central Banks have started to buy in the stock markets for private corporations. After all, central banks have always held the debt of their sovereigns, and this is just the reality of corporatism.

It is hard to figure out who might be more upset about this story: the US stock bears, or the Israeli taxpayers.

Well, Stan Fischer, the Governor of the Bank of Israel, was Ben Bernanke's mentor at MIT. Maybe he is just helping?

This adds a new dimension of flexibility to the Fed's swap lines with foreign central banks. 

Can you say ponzi scheme, bubbe? תוכנית פונזי

I know it's over when the fat lady sings, but the cantor?

Bloomberg
Israel to Begin Investing Reserves in U.S Equities Today
By Alisa Odenheimer
Mar 1, 2012 4:45 AM ET

The Bank of Israel will begin today a pilot program to invest a portion of its foreign currency reserves in U.S. equities.

The investment, which in the initial phase will amount to 2 percent of the $77 billion reserves, or about $1.5 billion, will be made through UBS AG and BlackRock Inc. (BLK), Bank of Israel spokesman Yossi Saadon said in a telephone interview today. At a later stage, the investment is expected to increase to 10 percent of the reserves.

A small number of central banks have started investing part of their reserves in equities. About 9 percent of the foreign- exchange reserves of Switzerland’s central bank were invested in shares at the end of the third quarter, the Swiss bank said on its website.

The investment will be made in equity index trackers and will include between 1,500 to 2,000 shares, among them stocks like Apple Inc. (AAPL), Saadon said.

The central bank decided to add equities to its investment portfolio in order to diversify, reduce risk and give better performance, Barry Topf, senior adviser to Governor Stanley Fischer, said in a Dec. 1 interview.

Note: When they say 'Securities' on the balance sheet below, they mean debt as in sovereign bonds. I don't know how they will characterize equities.

James Koutoulas: MF Global Financial Collapse And the Shadow Banking System

Here is James Koutoulas of Typhoon Capital Management, and the founder of the Commodity Customer Coalition, discussing what happened with MF Global on Russia Today. As an aside, I would be more than pleased to present an informative interview with Mr. Koutoulas on US or British television, but there do not appear to be any.

What could be alarming is that the conditions that led to the loss of customers' funds at MF Global have not been corrected, and it could be happening again at some other firm even now. We just may not realize it because the losses have not yet been publicly disclosed.

As in the case of MF Global, the insiders and powerful customers learn about the impending loss first, and take steps to secure their accounts before the collapse and downfall occurs.

A Single Large Seller Smashed the Gold Market Yesterday: Dr. Evil Strategy?

There are a variety of reasons to liquidate a large position.

But whatever the reason, no experienced trader would take a very large position into a thin market and then just dump it at the market, if they wanted to achieve some sort of reasonable economic benefit from selling that position.  One does not do this unless they were under significant duress, or have some motive other than profit. Such a trade is called 'selling against yourself.'

Usually one diversifies their positions slowly and carefully, selling some and buying others without roiling the markets. At some point their trading objective becomes known, but by then it is fait accompli.

Unless of course they may have a strategy to lose some in one market while making huge profits and buys in others at cheap prices, as in the case of buys in the mining sector while slamming bullion for example. Here is one old hand explaining how funds rig the markets.

A trader who was being paid to obtain the best value for the seller would be fired if they simply dumped a large position in the market, driving the prices realized down almost 10 percent in less than an hour.

The same situation occurred at roughly the same time in the silver market, as hundreds of millions of paper ounces of silver were just dumped in the market in less than an hour, breaking the price down dramatically.

Such unbridled selling triggers other selling, as the complex web of trades and relationships drive other parties to liquidate their positions and trigger stop loss orders.

I have described in the past how the big trading desks use the Dr. Evil tragedy to artificially disrupt markets. Regulators are in place to prevent such things from happening.

And this is the story of the economy and the governance of the US markets today. There is little rule of law, only the power of size. And it will get worse as the paper game comes closer and closer to default.

Personally I think there were multiple reasons and beneficiaries from yesterday's market action in the metals. When the word goes out from some powerful party, others in the market find out and craft their own strategies and trades to benefit from this insider information. This is how outsized profits are made.

I believe that some parties who were heavily short silver were staring into the abyss, seeing a first delivery notice going out into a paper market that is many multiples larger than their ability to deliver silver bullion into it. And a default of a major commodity exchange would have disastrous results for the confidence in the markets, already stretched thin by fraud and scandal.  So the interests of the big short, the government and the exchange might be aligned.

Let's see what happens. Because when these artificial market operations occur in a long term trend, they often are short lived, and tend to reinforce the primary trend, in this case the shortage of real bullion caused by many years of price manipulation and the resulting underinvestment to meet demand.

Still, there should be no need for speculation about what happened. The CFTC have the direct responsibility to question the seller's motives and trades, and to reassure the public about what happened. I am sure they will be doing that shortly, if they are actually doing their jobs.

When this tide of corruption goes out, 'we will see who was swimming naked,' as someone who some years ago owned a huge amount of silver, and then capitulated under duress and sold it, once said. And he remains bitter about it to this day.

“Large Seller in the Market” as COMEX Gold Hits $1,708
By GoldAlert Staff
February 29, 2012, 11:39am EST

...Commenting on the sell-off, CIBC World Markets wrote in a note to clients that “Gold – looks like a large seller of gold in the market. a 10k contract traded, down ticked the price by $40/oz. roughly 200k contracts trade per day, but unusual to see such a large single trade. not likely due to contract expiry either. That transaction represents 1mln oz of gold.

Postscript: Apparently I am not the only trader who saw this in the market. Caesar Bryan of Gabelli raises exactly the same concerns.

“What we saw yesterday in the gold market was very large volume just pounding the market lower and it raises the question, is this a seller who is trying to maximize his revenues? The answer is, maybe not because it was very sudden and the volume appeared to be very large.

This is actually similar to other experiences that we’ve seen in the last year where there has been a very sharp, sudden pullback in the gold market. But what I can tell you is the seller was not looking to maximize his revenue from the sales and to market participants like myself and others this is strange. The design of the selling raises serious red flags and leaves some questions unanswered.

I can only say the action was very odd and that’s as far as I want to go because I don’t know what the seller’s or sellers’ motivations were. We have seen this on a number of occasions over the last year where indiscriminate large selling will come in and the gold price falls like a stone. Sometimes gold falls $50 to $80, literally, within a few minutes..."

Read the rest here at King World News.