On 26 April 2013, the Kanto Finance Bureau (the "KFB") announced that it had revoked the licence of the Japanese branch of MRI International Inc. ("MRII")  (whose head office is based in the USA) and had issued the company with business improvements orders for breaches of the Financial Instruments & Exchange Act 2006 (the "FIEA"). MRII markets rights to dividends from profits made on the discounted purchase and collection of 'medical accounts receivable' ("MARS") in the USA to individual investors in Japan.

MRII purchased accounts receivable from the balance sheets of hospitals in the USA at substantial discounts and then collected these receivables from customers (i.e. hospital patients and suppliers) at their face value. The pool of receivable assets was then placed in a fund. These interests were sold to Japanese investors, who in return gained the opportunity to receive dividends from profits (where generated) amassed by MRII through collection of discounted accounts receivable at face value.

The KFB identified several breaches of the FIEA by MRII's scheme after an investigation by the Securities & Exchange Surveillance Commission (the "SESC"). These breaches included:

  1. MRII was using new investor's money, rather than profits generated, to make payments to earlier investors. According to the KFB, MRII had "since at least from FY2011 onwards, failed to segregate the various asset accounts, and had used money paid by investors for holdings in the fund to pay dividends and redeem the interests of other investors".This was found to be in breach of Art. 52 (1) (9) FIEA (i.e. a wrongful practice in particularly serious circumstances by a business dealing in financial instruments);
  2. MRII made false statements to clients in its sales literature, pre-contractual documents and in the contracts, in relation to how the investors' subscriptions would be used (in breach of Art. 38 (1) FIEA);
  3. MRII submitted falsified business reports to the KFB (in breach of Art. 47-2 FIEA);
  4. MRII provided false information in a report it was ordered to submit to the SESC in the course of SESC investigations into the scheme (in breach of Art. 52 (1) (6) FIEA).

Revocation of MRII's licence by the KFB (who is delegated with this task through secondary legislation, based upon powers granted to the Prime Minister) was directly connected to breaches (1) and (4) above, both of which allow the regulator to revoke licences under Art. 52 (1), FIEA.