The Securities and Exchange Commission agreed to a settlement with Hajime Sagawa related to his alleged role as the principal and minority owner of a broker-dealer that assisted Japan based Olympus Corporation in its concealment of losses by using offshore entities.
Over the course of more than a decade, Olympus executives are alleged to have hidden losses in offshore entities based in the Cayman and British Virgin Islands that they controlled but did not consolidate in Olympus financial statements. According to the SEC, these entities purchased poorly performing investments from Olympus with bank loans secured by assets owned by Olympus.
In order to repay these loans, Olympus retained Axes America, LLC, a registered broker-dealer managed by Sagawa, as its financial advisor for several transactions. The SEC claims that Olympus paid Axes disproportional fees for these transactions that were routed back to the offshore entities and were used to pay the bank loans. The SEC charged that Sagawa violated Section 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and aided and abetted Olympus in violating Section 15(c)(1)(A) of the Securities and Exchange Act of 1934. The settlement bars Sagawa from the securities industry, but notably the SEC declined to impose a civil penalty based upon his cooperation with its investigation.
In the Matter of Hajime Sagawa, Admin. Proceeding File No. 3-16412 (SEC Feb. 27, 2015).