COLUMN ONE : ‘Honey, I Shrunk the Nest Egg’ : Japanese women, who traditionally handle family finances, took heavy losses in the stock market collapse. Now, some fear telling their husbands.

It was sheer boredom that drove Hisako Arai into the stock market. Her children were grown. Her husband was busy. And though she had a pharmacist’s degree, he wouldn’t let her work.

The 61-year-old grandmother had fun riding the raging bull market of the 1980s. But as the market shed 56% of its value between December, 1989, and April, 1992, Arai managed to lose more than $4 million of her husband’s money without his knowledge.

Now he’s threatening divorce. Creditors are circling. She is overwhelmed with shame. She has lost hearing in one ear and her hair is falling out.

“I have thought a lot about suicide,” Arai said. “But even if I do it, the life insurance won’t cover my debts.”

For women like Arai, the Tokyo stock market collapse has meant equal opportunity to lose their shirts.

Japanese women traditionally have been responsible for managing the family finances. But the stock market had long been considered a risky, unladylike place. During the late 1980s, however, independent-minded women marched into stocks along with other new investors who thought Japanese share prices were destined to rise forever.

The big brokerages launched aggressive advertising and marketing campaigns to lure female customers. Some firms ran television advertisements showing bouncy young working women turning on personal computers and watching their portfolios soar. Others hired thousands of supplemental saleswomen--dubbed “middies” because most were middle-aged--to help male brokers make their rounds.

Japan’s largest brokerage, Nomura Securities, opened 18 branches in department stores and supermarkets, where most of the clientele was female. Its flagship stock boutique was in the swanky Mitsukoshi department store in downtown Tokyo.

That branch closed recently, in yet another sign of the grim times gripping the securities industry as individual investors flee a market they now see as stacked in favor of big institutional players and against the likes of housewives.

Today, a Nomura spokeswoman denies that the firm ever targeted women.

“We didn’t put that much energy into getting women customers,” said spokeswoman Tomoko Aikawa.

There are no statistics to indicate how many women jumped into the market during Japan’s stock frenzy--or how much they lost in its worst postwar stock debacle. Many experts say women probably fared no worse than other amateur investors. Nearly all took a pounding.

Aikawa insists that Nomura did not notice a dramatic increase in female clients during the boom, and said she believes the incidence of homemakers wiped out by the bust is being exaggerated by the Japanese media.

But Arai says women were seen as easy marks by overzealous stock salespeople.

“The securities firms think women are less decisive than men; they think women can be easily pushed around; they think we are inexperienced and maybe stupid,” she said. “So they think women make good customers.”

In a land where losing face can be much worse than losing money, few investors are wailing in public. But there is a dirty little secret in Japanese home finance these days: Some of the yen that the men thought their wives had stashed under the tatami mats has vanished along with the “bubble economy” of the 1980s. Some of these wives are furious at themselves, their brokers and the Japanese government--but are too mortified to tell their men.

“Men and women are both pathetic when they lose their life’s savings,” said attorney Seijiro Watanabe, who represents investors in lawsuits against brokerage firms. Watanabe says many of his male clients are devastated by losing the retirement savings they slaved to earn. But, so far, none of their wives have threatened to leave them.

“No husband has ever come to see me and asked me not to tell his wife,” Watanabe said. “But I do have women who beg me, ‘Please don’t tell my husband.’ ”

One such client is a Mrs. Suzuki, who asked that her first name not be published. She knew her husband considered stocks too risky for the family nest egg. But in 1987, when the market began levitating, a “middie” for Yamaichi Securities persuaded her to buy what was billed as a blue-chip issue: Nippon Telephone & Telegraph.

The Japanese government was privatizing a company with a name as familiar as Ma Bell’s, and Suzuki, along with thousands of other small investors, figured she couldn’t go wrong. A Yamaichi finance subsidiary even lent her the money to buy more stock.

But the NTT shares are now worth a quarter of what Suzuki paid for them. She says she is out $770,000--including interest she cannot pay.

“My husband doesn’t know about it,” she whispered into the telephone. “My husband will divorce me if he finds out.”

Before the days of direct deposit, Japanese workers were paid with an envelope containing cash. A good husband would hand the envelope over to his wife still sealed. The wife would give her husband an allowance to cover items such as lunch, cigarettes, beer and golf. It was her duty to make ends meet with the rest.

As keepers of the household purse, most women still decide how much to save and where to invest. A man considering a major purchase will often say he must first consult with “the Ministry of Finance”--his wife.

Most women kept their savings in banks and postal accounts until tax changes in the late 1980s made stocks seem more attractive. Securities firms responded by creating “ladies” mutual funds, which “middies” helped peddle door-to-door. “Middies” were not allowed to sell stock but introduced customers to male brokers who did.

“The things that they really targeted women with” were mutual funds that promised lucrative returns, said Jeffrey M. Daggett, a former Nomura Securities employee who now runs Greater Pacific Partners Inc., a private investment company in Berkeley. “They positioned them as being conservative but they were actually kind of risky.”

When selling to housewives, Daggett said, the idea was to “get them comfortable” with a mutual fund account, then let the customer know that other products--ranging from conservative “widow and orphan” stocks to more risky investments, such as syndicated shares of New York office buildings--were also available.

“The big thing was always to get the customer to the point where they would let the broker buy and sell at their discretion,” Daggett said.

Disgruntled investors now allege that practice led to widespread “churning” or rapid-fire trading of stocks to generate large sales commissions.

The telephone company stock attracted more first-time investors than any other, and the NTT debacle is a symbol to many of what went wrong with the market.

Mrs. Kato, 61, a part-time schoolteacher who says she lost more than $500,000 on NTT stock, echoes the view held by many investors that the Japanese government helped to artificially inflate the price of NTT shares, sold over several years at increasingly steep prices. The stock is now trading at less than a fourth of its peak price of 3.18 million yen.

Kato is preparing a lawsuit against her broker, and she hopes the firm will agree to make up some of the losses before her husband finds out the money is gone. So far, no settlement has been forthcoming.

What galls Kato are the recent scandals in which Japan’s top securities firms admitted compensating favored clients for trading losses, while ordinary investors had to take their lumps.

“They guaranteed the big banks and customers that they wouldn’t lose money, but they just ignore us,” Kato said. “I think they do discriminate against women--especially housewives.”

But a leading gadfly of the securities industry says the charge of sexism is unfair. The brokerage houses have for decades taken advantage of all small investors, says Kei Miyazawa, a former broker at Yamaichi Securities who has written a dozen books lacerating the industry for alleged corruption, stock manipulation, churning and insider trading in what he calls “Mafia capitalism.”

“The securities firms, the banks and the large corporations rake up the big profits, and the individual investors lose,” Miyazawa said. “This has been the setup of the market ever since the war. . . . The Japanese securities firms grew huge by eating up the capital of individual investors.”

Such assertions are salt in the wounds of an industry that has already been flayed by scandal, slumping share prices and a sputtering economy.

Last month, the industry announced the worst cumulative performance since 1964. Twenty of the top 25 brokerage houses racked up pretax losses in fiscal 1991, and the other five saw profits plunge, according to a survey by the newspaper Nikkei. At Nomura, profits dropped 81%, or $339 million, and Yamaichi lost $409 million for the year ended in March.

Meanwhile, brokerages have been slapped with a flurry of lawsuits by furious investors, a rare departure for the usually unlitigious Japanese.

Yamaichi declined to comment on the allegations by Arai and Suzuki. Nomura spokeswoman Aikawa confirmed that the firm has 48 suits pending, very few of them from women. Nomura’s financial stability would not be affected by any litigation losses, Aikawa said, but noted that the firm does feel the suits could pose “a danger to our reputation over the long term.”

While securities firms attempt to restore their tarnished image, Arai doubts that her marriage can ever be put back together.

“It’s like a teacup; once cracked it cannot be restored,” she said.

Arai said her downfall began when her brokers at Yamaichi Securities persuaded her to try margin trading using her husband’s name and seal and putting up other stocks as collateral.

When the market plunged, so did the value of the collateral, and she had no way to cover $540,000 in losses. Desperate, she confessed to her husband. Yuko Arai says he summoned the brokers to their home and informed them that he would take out a bank loan to cover his wife’s debts--but warned them that he would divorce his wife if she continued to trade behind his back.

But two months later, she said, the broker called and promised to make the money back by putting her into “ambulance stocks”--shares deemed suitable for wounded investors because they were proclaimed to be sure to rise. She bit, and is now out $4 million.

“He will never forgive me as long as he lives,” Arai said.

She is struggling with her guilt over deceiving her husband. But she also resents his intolerance, maintaining that if their roles were reversed, she would forgive him.

“If a husband loses that much money, his wife will follow two steps behind him into poverty. . . ,” she said. “I suppose I would be a beggar with him. . . . They say Japanese women are more equal now but really we’re not.”

Japan’s Struggling Stock Market

The Nikkei index, a key measure of the health of Japan’s stock market, plummeted between December, 1989, and April, 1992, costing Japanese investors untold giant sums on paper and for real. Women, in particular were stung by the market’s collapse.

Source: Data Resources Inc.