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Authors: Mitsuru Misawa
Published by: Asia Case Research Centre, The University of Hong Kong
Published in: 2006

Abstract

This is the first of a two-case series (706-003-1 and 706-004-1). In 1995, Sumio Abekawa, Daiwa Bank''s president, received a letter on 18 July from Toshihide Iguchi, Vice President of the bank''s New York branch. In that letter, Iguchi confessed that over the course of 11 years he lost nearly US$1.1 billion (approximately 123 billion yen) through unauthorised trading of United States Treasury Bonds and had sold securities the bank had in custody to cover losses. Two months later, Daiwa''s senior management reported the loss to the Federal Reserve Board of the New York and New York State Banking Department. The bank directors faced several challenging questions: Had the bank taken the appropriate steps in compliance with US reporting requirements? What would be the potential liability of the directors? Would the Japanese bank directors be held liable for violating the law of a foreign country? How could the Japanese Ministry of Finance help?
Location:
Other setting(s):
1995 to present (for a period of 10 years)

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Abstract

This is the first of a two-case series (706-003-1 and 706-004-1). In 1995, Sumio Abekawa, Daiwa Bank''s president, received a letter on 18 July from Toshihide Iguchi, Vice President of the bank''s New York branch. In that letter, Iguchi confessed that over the course of 11 years he lost nearly US$1.1 billion (approximately 123 billion yen) through unauthorised trading of United States Treasury Bonds and had sold securities the bank had in custody to cover losses. Two months later, Daiwa''s senior management reported the loss to the Federal Reserve Board of the New York and New York State Banking Department. The bank directors faced several challenging questions: Had the bank taken the appropriate steps in compliance with US reporting requirements? What would be the potential liability of the directors? Would the Japanese bank directors be held liable for violating the law of a foreign country? How could the Japanese Ministry of Finance help?

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Location:
Other setting(s):
1995 to present (for a period of 10 years)

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