Japan’s securities watchdog is investigating a US-based investment company on suspicion that it falsified performance reports and could not account for the bulk of its US$ 1.4 billion (HK$ 10.87 billion) in disclosed funds, a source with knowledge of the probe said.

The Securities Exchange and Surveillance Commission (SESC) will recommend penalties against Las Vegas-based MRI International as early as Friday, the source said. That would be followed by an order form its parent agency, the Financial Services Agency, to freeze the asset manager’s assets, the source said.