Japan's financial watchdog said Tuesday it has ordered the financing brokerage unit of Japanese online financial firm SBI Holdings Inc. to suspend operations for a month over illegal soliciting of funds from investors.
The Financial Services Agency issued the business suspension order through July 7 against SBI Social Lending Co. after confirming that the unit had solicited funds from investors with false or misleading information in connection with several lending cases, as a third-party panel of the parent company found in late April.
The social lending unit solicits funds from investors and lends to companies. Investors can get back their principal with interest.
The Tokyo-based subsidiary collected 20.7 billion yen ($190 million) from investors in two years from November 2018, saying the borrower would use the money to develop solar power plants and apartments for rent. But the panel later found that 12.9 billion yen of the funds had been used for other purposes, according to the FSA.
The panel had pointed out that the subsidiary has demonstrated sloppy lending assessments, saying its top management lacks a sense of professionalism.
SBI Holdings said last month it has decided to withdraw from the social lending business and pledged to return the collected money to investors impacted by the illicit practices. It stopped soliciting new funds in March.
