Science and Greed

A few weeks ago, I saw a news on TV about a Ponzi scheme that was carried out by a company named MRI International Inc. The company sold investors securities that were claimed to be backed by medical accounts receivables in the United States. In fact, no investment was made on any assets and the money was spent on luxury goods and other things. All of the investors’ money – 1.5 billion dollars (approx. 180 billion yen) – is gone, making it one of the largest fraud cases in Japan. The executives were arrested, and I wonder what was their plan, if there was any, to end their Ponzi scheme.

News like this does not help improve the image of securitization in Japan, which was already tarnished by the mortgage-backed securities debacle in 2007-08. Neither does it help regain the trust of the Japanese people toward foreign investment opportunities.

I am sure the industry of fixed investment is populated by good and smart people. They use sophisticated math models, lognormal distribution and what’s not, to predict risks, making the industry look almost like a science. Then human factors – lies, greed, short-sightedness – shake it from top to bottom. It’s such a shame.

Kimoto Financial Translations

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