Japan Investment Corp. Looks for Global PE Partnerships

Japan’s state-backed investment firm looks to partner with global private equity firms to accelerate the growth of domestic companies, Reuters reports.

Japan Investment Corp. ($20 billion) will create funds with private equity firms, sovereign wealth funds, and institutional investors to invest in Japanese businesses, rather than invest directly.

“The biggest difference between us and foreign private equity firms such as KKR, Blackstone, and Bain Capital, is that we are a long-term investor,” Masaaki Tanaka, the organization’s chief executive officer, told Reuters.

He added that there is a current “prejudice” against foreign private equity firms in Japan, but if the businesses would team with the Japan Investment Corp., it would then be able to overcome that obstacle, benefiting all.

The organization was established last month, taking on the responsibilities of the Innovation Network Corp. of Japan, another state fund that aimed at promoting growth in domestic companies.

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The Japan Investment Corp.’s chief said it would be willing to buy the stakes of private equity funds it co-invests with, if the funds decided to exit early. Tanaka also told the news agency that smaller Japanese private equity firms would be able to reach larger deals if they paired up.

In addition to the private equity foray, the state entity wants to create a venture capital fund, a fund that targets overseas firms, and an engagement fund that would own about a 5% stake in companies. The Japan Investment Corp. also wants to make proposals on improving corporate management, a recent countrywide mission to improve its reputation.

Tags: Japan, Japan Investment Corp., Masaaki Tanaka, Private Equity

The SEC has settled securities fraud charges with self-proclaimed “Frack Master” Christopher Faulkner in connection with a securities fraud scheme that raked in more than $80 million from hundreds of investors.

Faulkner will serve 12 years in federal prison for securities fraud, money laundering, and tax evasion, and was ordered to disgorge $23.1 million plus pay another $1.9 million in prejudgment interest for a total of more than $25 million.

According to the SEC’s June 2016 complaint, Faulkner systemically deceived investors by disseminating false and misleading offering materials, misappropriating millions of dollars of investor funds, and manipulating the stock of Breitling Energy Corp. (BECC), a publicly traded company Faulkner controlled.

The SEC alleged that Faulkner misappropriated at least $30 million of investor funds for personal expenses, which included cars, jewelry, gentlemen’s clubs, personal escorts, lavish meals, entertainment, and international travel.

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Faulkner promoted himself on TV and radio appearances as an expert in “fracking” or hydraulic fracturing, which is the process of drilling and injecting fluid into the ground at a high pressure to fracture shale rocks in order to release natural gas.

Faulkner even wrote a book that was published in 2014 called “The Fracking Truth,” in which he touted himself as the “Frack Master.” However, the SEC said he was no expert on the subject, and that his exposure to the oil and gas industry was limited to running a website data hosting company that had oil and gas companies as clients.

“Faulkner first proclaimed himself the ‘Frack Master’ in order to deceive investors about his expertise and steal millions of dollars to fund his lifestyle,” said Shamoil Shipchandler, director of the SEC’s Fort Worth Regional Office. “Today’s serious civil and criminal sanctions serve as a warning to anyone who intends to target retail investors.”

The SEC said Faulkner started the scheme in 2011 through privately held Breitling Oil and Gas Corp., which offered and sold “turnkey” oil and gas working interests to investors using a team of cold callers. As part of the offerings, Faulkner lied to investors about his experience, the drilling-cost estimates for the prospects, and the use of their invested funds.

The SEC also charged 11 other individuals and entities for their roles in the misconduct and has reached settlements with most of them.

Under the agreed final judgment, which has been approved by the court, Faulkner is also permanently enjoined from violating various provisions of the federal securities laws and from participating in any unregistered securities transactions and is barred from serving as an officer or director of any SEC-reporting company, and from participating in any offering of a penny stock.

Tags: Breitling Energy Corp., Christopher Faulkner, Frack Master, penny stocks, SEC