'Brace For Impact' - Germany says European Central Bank’s quantitative easing illegal

'Brace For Impact' - Germany says European Central Bank’s quantitative easing illegal.(RT).

Germany’s constitutional court said the European Central Bank’s bond-buying program- Outright Monetary Transaction (OMT) - “infringes” on the powers of individual nations, a claim the ECB has flatly denied.

ECB takes note of announcement made today by German constitutional court. ECB reiterates that the OMT programme falls within its mandate
— ECB (@ecb) February 7, 2014

The OMT program was launched in response to the European debt crisis in September 2012 under ECB President Mario Draghi, and is credited with helping the flagging euro currency make a market comeback. Under the program the Governing Council of the ECB buys in secondary, sovereign bond markets the obligations issued by Eurozone members.
“In the view of the Senate, there are important reasons to assume that it exceeds the European Central Bank’s monetary policy mandate and thus infringes the powers of the member states, and that it violates the prohibition of monetary financing of the budget,” the court said on its website.
The main “infringement” is that sterilization, a conservative policy measure used to stabilize the euro during the crisis - once abolished, could pump nearly $237 billion (175 billion euro) into the economy, Reuters reports. This would bring calm to euro zone currency markets.Read the full story here.

Tokyo Based Hedge Fund AIJ May Have Lost/Stolen/ 'CHANGED' All Customer Pension Fund Money.

Hedge Fund AIJ May Have Lost/Stolen/ 'CHANGED' All Customer Pension Fund Money.(BLN).(BLB).The suspension of AIJ Investment Advisors Co.’s operations amid concerns hedge funds it manages had lost pension money may undermine plans by Japan’s retirement funds to boost returns to meet demand in an aging society.The Financial Services Agency ordered AIJ on Feb. 24 to suspend business operations for one month. The company had collected about 210 billion yen ($2.6 billion) from about 120 corporate pension funds.
However, AIJ officials told investigators with the SESC that the company was now only managing an investment portfolio worth about 20 billion yen, meaning that about 90 percent of the assets deposited by the corporate pension funds are wiped out.
The Financial Services Agency on Feb. 24 ordered the Tokyo- based firm with 183.2 billion yen ($2.3 billion) of client money to stop business for a month as the regulator investigates “possible losses” at AIJ’s hedge funds. The FSA also will undertake a nationwide probe of 263 asset managers.
“If the funds actually suffered losses, this could potentially have a massive impact on pension plans that actually invested with them,” said Taro Ogai, who oversees consulting for pension fund investments at Towers Watson in Tokyo. “Pensions already face difficulties. At a time when they are trying to boost returns and cut risks, investing in hedge funds may become difficult for them.”
The inquiry is a setback for Japan’s pension industry that has been looking to diversify away from bonds and equities into alternatives investments, including hedge funds, to maintain steady returns and fund retiree benefits in a country with the world’s fastest-growing aging society and two decades of slumping markets...
Regulators have been investigating AIJ, which invests in futures and options of equities and bonds, since the end of January, and discovered that the company has been unable to explain to investors the current state of the way their money is being managed, according to the FSA...
AIJ’s funds have been traced from Japan to the Cayman Islands, followed by a trust bank in Bermuda and ultimately to “a major European Bank” in Hong Kong, the Asahi newspaper said Feb. 25, citing an investigation by Japan’s Securities and Exchange Surveillance Commission. AIJ kept money-flow records up to the unidentified bank in Hong Kong and no further records have been found, the newspaper said...
AIJ may have lost most of the 200 billion yen it manages for companies’ pension plans, the Nikkei newspaper reported Feb. 24, citing unidentified securities investigators...Japan’s financial regulator is also planning to investigate trust banks that handle pension money as well as corporate pensions, the Nikkei newspaper reported over the weekend. The regulator penalized at least 35 financial institutions last year including Citigroup Inc. and UBS AG for breaching securities rules, according to its website...AIJ, led by Kazuhiko Asakawa, was established in April 1989, and had 120 clients including pension plans with 183.2 billion yen in assets as of the end of 2010, according to a statement from the FSA. It has 12 employees. Phone calls to AIJ’s main office were answered by an automatic recording which didn’t allow messages to be recorded. Asakawa was a former employee at Nomura Holdings Inc., according to a person familiar with his employment. Keiko Sugai, a Tokyo-based spokeswoman at Nomura, declined to comment...
AIJ’s fund was ranked top among pension funds in 2008, said Fujio Nakatsuka, a spokesman at Rating and Investment Information Inc. in Tokyo. He said the rankings were based on responses from pensions and not what R and I had recommended to investors...Read the full story here.