Japanese Housewives Desperate After Currency Scheme Collapses

[depakid]

Source: Bloomberg

Allied LLC, an Osaka-based asset manager, is under investigation on suspicion it bilked Japanese investors, mostly housewives, using a currency trading fund, a police official said. Investigators said a woman they declined to name who ran Allied seminars has disappeared after getting 300 people to invest 2.4 billion yen ($26.57 million) in the fund. The company stopped paying dividends in November last year.

“Allied was raided on Jan. 15 on suspicion of running a business without a license in violation of the Financial Products Trading Law,” said Kiyotaka Kawamura, a police investigator in Kochi prefecture, on the western island of Shikoku. The police confiscated computers and documents. No arrests have been made, he said. Allied’s phone number was disconnected when called by Bloomberg News.

Officials handling complaints from investors say Allied, which promised risk-free returns of as much as 5 percent a month, may have operated as a Ponzi scheme, in which early investors are paid with money received from new ones. While the scale of the suspected fraud is small compared with the $50 billion scam New York-based Bernard Madoff has allegedly admitted to running, it taints a market that was growing as low interest rates limit fixed income returns.

“We’ve had 37 victims come in seeking help,” said Yuriko Asai, deputy head of the Kochi Prefecture Consumer Center, adding that more than half of them were women. “There are people who lost 20 million yen and some who lost all their financial assets,” Asai said. She said investors were told they would receive a finder’s fee for introducing new clients.

Read more: http://www.bloomberg.com/apps/news?pid=20601109&sid=aGeeh4B_CLSE&refer=home

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I'd heard stories for years that Japanese women- even teenaged girls, played the forex markets and were especially fond of the high yielding Aussie.

I bet a lot of them lost big this year- and not from ponzi schemes.

[Bicoastal]

1. I think it's in very poor taste...

...that Bloomberg couldn't resist the "Desperate Housewives" gag in the title.

Seriously, this is a very serious matter in Japan. Why poke fun at the victims?

[Veritas_et_Aequitas]

2. Shadenfreude.

It's the oldest antidepressant in the world, baby.

[depakid]

3. Don't really have much shadenfreude over it

Though it does make me wonder how much influence the whole carry trade business had over the astonishing rise- and subsequent fall of the Aussie dollar.

From near parity in July to about 65 cents today. I'm guessing not all of it had to do with commodity prices....