The Nikkei reports today that Global Financial Support stopped the refund of principal of "HOPE series"of investment products which invested into love hotels. The products promised a yield of 8.4% yield per year to retail investors with a minimum investment of ￥500,000. However, they have run out of money and have stopped redemptions by investors.
Investors have retained lawyers to sue the manager (GFS).
GFS issued various funds known as the "HOPE series" of which there were 10 separate funds each investing into single love hotels. They started operating from Oct/2006, and "HOPE last", which started operating Sep/2007. In term of "HOPE alfa 7~10" of currently in operation, GFS announced to stop the refund of principal at 14th Sep. In term of "HOPE last" of finishing operation, GFS announced that amount of redemption remained about ￥80,000 per principal ￥500,000.
According to lawyers, GFS traded hotel asset between each funds, and postpone loss of hotels to successor fund. Moreover, lawyers pointed out that their inappropriate operation to "the breach of trust and dishonest asset management"
Not only GFS did not sufficiently explain a sales of property to investors, but GFS assigned investors capital into a subordinated equity, which should be provided by GFS. Moreover, if introduced new investors to them, GFS paid an incentive (2.5%~5% of principal) to introducer
Asset and property of GFS is already a subject to seizure. Also , GFS could not make a payment a rental fee of their office.
http://kenplatz.nikkeibp.co.jp/article/nfm/news/20100929/543553/
This fund was covered in this article
http://www.tokyoreporter.com/2009/12/01/funds-investing-in-love-hotels-rise-to-the-occasion/
Web Site for GFS -
http://www.hotel-fund.com/
GFS investor news/updates -
http://www.hotel-fund.com/investor/
Class Action Law Suit website -
http://gfshope-bengodan.com/index.html
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