AIJ Investment Advisors' president and three others have been arrested on fraud charges relating to $1.4bn (£890m) of missing pension funds.
President Kazuhiko Asakawa and executives at AIJ agent ITM Securities could face jail if found guilty.
AIJ managed money for more than 100 companies but was stripped of its registration in March after failing to account for most of its clients' funds.
Japanese prosecutors said $9m of the missing money was stolen from clients.
The scandal is the latest to hit Japan, and there have been calls for changes in corporate governance.
At the end of last year, Japan was shocked by the news that camera maker Olympus had hidden $1.7bn in losses for as long as 20 years.
Japanese pension fund managers are facing pressure to provide high rates of return, despite the fact that the country's economy has experienced weak growth for two decades.
Some funds are required to provide a return as high as 5.5% at a time when returns on safer investments such as lending to the government are at record lows.
Over the past decade, the Japanese economy has grown at a nominal rate of between 0% and 1%, while the yield on the 10-year Japanese government bond is 0.8%. The Bank of Japan's deposit rate has remained near 0% since 1995.
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