Organized Crime in the Japanese Financial Markets

Posted by Bull Bear Trader | 8/28/2008 08:52:00 AM | , | 0 comments »

There is an interesting article in the Time Online (London). Apparently, Japan's powerful yakuza organised crime syndicates are moving away from old-fashion crimes of drugs and prostitution and are increasingly launching an assault on Japan's financial markets. Studies estimate that there are already hundreds of listed companies that may have some mob connections. Using "front companies," organization have become active traders in listed Japanese shares and in some cases own large positions. Of interest in the article is the feeling that "the new activities of the nation's largest crime syndicates have effectively turned the mob into the biggest private equity firm in Japan." Things have gotten so bad that some observers believe that the problem may have gotten to the point where it is now beyond control. The problem continues to grow exponentially as the groups hire newly unemployed traders who have been laid-off as a result of the credit crunch. In fact, the current mixture between legitimate and illegal activities is making it nearly impossible to discern the difference between the funds that flow through the Japanese markets. Some organizations even operate their own stock trading floors.

All of this reminds me of the attributed quote by the famous bank robber Willie Sutton, although the story may be an urban legend. As the story goes, Sutton was ask by a report why he robbed banks. Sutton is quoted as replying: "Because that is where the money is." It should really be no surprise that criminals will search out the financial markets for profit. After all, that is where the money is.