Edward Brogan was Japan's highest-profile hedge fund manager until he suddenly dropped out of view this month.
Dubbed the "King of Tokyo" by traders, the 53-year-old American seemed to have it all: wealth, professional acclaim and status as a patron of contemporary art.
In his best year, Brogan had managed over one billion dollars in his flagship Whitney Japan Fund, although much of that has been withdrawn.
Now Brogan is at the center of a probe of insider trading. His Tokyo-based firm Japan Advisory has been closed since regulators imposed a fine and revoked its license at the end of June.
The order came after Japan's securities watchdog determined Japan Advisory had shorted shares in Nippon Sheet Glass in August 2010 on the basis of leaked information that the glassmaker was planning an additional share offering that would have diluted its value per share.
It was one of five insider trading cases unearthed so far by authorities after a grinding two-year investigation into allegations of widespread insider trading ahead of public share offerings in Japan.
Brogan, who is said to be overseas, has not been charged with any wrongdoing, and none of the current raft of insider trading investigations in Japan has included any legal sanctions against individuals.
"He's not in Japan, and I haven't heard when he's coming back," Brogan's Japanese-born wife, Junko, told Reuters. "I think he's being made a scapegoat by the Japanese government."
Japan's Financial Services Agency (FSA) stepped up the pressure on Japan Advisory earlier this month by ordering a dozen investment banks to report on whether they had leaked inside information about planned share issues to the hedge fund manager in return for winning trading orders.
The July 3 directive was the first time Japan's securities watchdog had singled out an investment firm like Japan Advisory for that kind of scrutiny.
Three days after the July 3 order, Brogan left Japan, two people with knowledge of his departure said.
A sign outside the Japan Advisory office says: "Temporary Closed." There was no immediate word on the fate of its affiliated funds.
By the end of June, assets in the flagship fund had dropped to $228 million, falling over time to about a sixth of the value in 2005, according to industry data.
But Whitney Japan has outperformed the market by a wide margin since 2000.
Brogan did not return calls or respond to a message sent by email. Temporary staff at Japan Advisory declined to comment.
Grey area
How the Japan Advisory case plays out will be closely watched since Japan's $17 billion hedge fund industry has operated in a kind of grey area of oversight for years.
The position of hedge funds has been a focus of the FSA since at least 2007 when then-financial services minister Yoshimi Watanabe said some of them were "piranhas" that needed to be expelled.
Tsutomu Okubo, the lead director of a ruling Democratic Party of Japan committee looking into insider trading told Reuters he was gathering trading data with the aim of publishing a watch list of suspicious hedge funds that should be investigated by regulators.
When it launched in 2000, Japan Advisory had been a subsidiary of the U.S private equity and hedge fund operator the Whitney Group.
But Brogan's former partner, J.H. Whitney Investment Management, said it severed ties with Japan Advisory in December 2011 and transferred controlling interests in two affiliates to Brogan and others. It said in a statement the move was unrelated to the insider current investigation.
In interviews with Reuters, more than a dozen of Brogan's associates described him as a driven investor who pushed hard to uncover profitable trading ideas and paid brokerages bonuses that could vary on the level of service he received.
In more than a decade of trading, Japan Advisory spun off tens of millions of dollars in commissions for brokerages including Goldman Sachs, JP Morgan, Citigroup and Nomura Holdings, associates says. Representatives of all of those financial institutions declined to comment.
Brogan and the firm gave "bonus" or "tactical points" to brokers that could mean additional commissions, three people with knowledge of the practice said. Like others interviewed they spoke on condition of anonymity because of the ongoing investigation.
The use of a points system by institutional investors to compensate brokers is not unusual in Japan, but Brogan's model was heavily discretionary, creating a possible incentive for inside information to be leaked, officials have said.
In the Nippon Sheet Glass case, investigators found Japan Advisory had short-sold about $6.8 million in shares on Aug 20, 2010, four days before the company announced a share offering to raise capital that diluted the holdings of existing investors. A sell-off over those four days cut the glassmaker's market value by 8 percent.
Regulators believe a former employee of Daiwa Securities Group was the source of that tip. Daiwa, which underwrote the offering, has apologized and launched its own investigation. The identity of the former employee has not been made public. One reason that regulators centered on the Daiwa connection was Brogan's allocation of points to the brokerage, one person with knowledge of the matter said.
Japan Advisory was the second firm punished for insider trading in the Nippon Sheet Glass offering. In the other case, Japanese hedge fund Asuka Asset Management was fined and regulators believe JP Morgan, the other lead underwriter on the offering, was the source of that leak.
Man about town
Daiwa was not alone in courting Brogan. Brokers would host him at expensive nights out on the town, that would often start at upscale Italian restaurants and end at a strip club in the Kabuki-cho neighborhood of Shinjuku, four people who competed for Brogan's attention and business said. The tab could run into the thousands of dollars, and it was understood Brogan's hosts would pay.
"He wielded so much power and everyone kind of bowed down to him," said one broker who worked with Brogan. "He was the 'King of Tokyo'. That's what we called him."'
For Brogan, the current investigation is the most serious setback in a three-decade career. He first came to Japan in the boom of the 1980s and by 1991, he was research director at Marusan Securities, a second-tier Japanese broker. He then made the leap to a series of Western banks, including a stint as auto analyst at Salomon Smith Barney. He was briefly at Tiger Management in Japan, an offshoot of the famous fund established by Julian Robertson.
In 2000, Brogan was hired by Whitney to help set up Japan Advisory.
By 2005 -- the fund's best year -- the Whitney Japan Fund was worth $1.3 billion. One million dollars invested in 2000 would have been worth $2.5 million by that year, according to industry data.
The collector
When he was riding high, Brogan cultivated an interest in modern Japanese art.
"I approached him to create an art fund because he was the biggest and most important on the street," said Joni Waka, a Japanese curator who has anglicised his name to Johnnie Walker.
That idea fell through but Walker became a friend and a confidante of Brogan. He also helped build a large art collection for Brogan that remains in the offices of Japan Advisory. Works on display in the hallway alone could sell for over $100,000, experts said.
Brogan's interest in art took him into a world far removed from funds and stock picks. Three months after Japan's earthquake and nuclear crisis last year, Brogan was the only person with a finance background at a masquerade party with art writers, journalists and a self-described Japanese shaman.
In a video of the party, a shirtless waiter stood at attention, while each guest was asked to say how they would tackle Japan's crisis. Brogan, wearing a Hawaiian shirt and a gold mask, singled out energy policy and said: "If I were prime minister, I would be focused on making Japan a green leader."
Brogan continued to meet friends and brokers until weeks ago at a small bar just minutes from his home in the Hiroo district of Tokyo. He stored his favored Rebel Yell Kentucky bourbon there. An empty bottle sits on the shelf as a kind of tribute kept by the staff.
Walker, his confidante, said Brogan would be back. "Ed Brogan is taking a step back. He's keeping his cool," he said.