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This is the second of a two-case series (706-003-1 and 706-004-1). This case raises many basic legal and economic issues regarding directors'' responsibilities for their mismanagement, which were not discussed in the (A) case. Based on a board meeting held in Japan, the case looks at management responsibility from different angles. Must senior management be held responsible for those responsibilities they have delegated to others? What about the bank''s responsibility as an institution? Challenging questions raised by Daiwa''s directors in the board meeting were: Was there any non-compliance regarding duties in establishing an internal control system? Can directors claim the principle of trusting right? Is Daiwa bank also responsible under the principle of respondeat superior?