In 1995, Sumio Abekawa, Daiwa Bank president, sent a letter on 18 July from Toshihide Iguchi, Vice-President of the Bank’s New York branch. In this letter, Iguchi confessed that in the course of 11 years, he has lost nearly $ 1.1 billion (approximately ¥ 123 billion) by the unauthorized trading of United States Treasury bonds and sells securities the bank had in custody, had to cover losses. Two months later, Daiwa reported the loss of senior management to the Federal Reserve Board of New … Read more »

In 1995, Sumio Abekawa, Daiwa Bank president, sent a letter on 18 July from Toshihide Iguchi, Vice-President of the Bank’s New York branch. In this letter, Iguchi confessed that in the course of 11 years, he has lost nearly $ 1.1 billion (approximately ¥ 123 billion) by the unauthorized trading of United States Treasury bonds and sells securities the bank had in custody, had to cover losses. Two months later, Daiwa reported the loss of senior management to the Federal Reserve Board of New York (FRB) and the New York State Banking Department. The bank directors faced several questions: If the Bank had the appropriate measures to comply with U.S. reporting requirements? What was the potential liability of directors? Would the Japanese bank directors are liable for the violation of the law of a foreign country? How could the Japanese Ministry of Finance to help?
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Mitsuru Misawa
Source: University of Hong Kong
15 pages.
Publication Date: Nov 21,, 2005. Prod #: HKU442-PDF-ENG
Rogue Trader at Daiwa Bank (A) responsibility of management under different jurisprudential systems, practices, and cultures HBR case solution

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