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A Rogue Trader at Daiwa Bank (A): Management Responsibility under Different Jurisprudential Systems, Practices and Cultures                                                                                                                                                                                                                
Product Ref: 05/268C Company: Daiwa Bank

Product Type: Case Industry: Banks & Diversified Financials

Related Product(s): Teaching Note
Authors: Mitsuru Misawa   
In 1995, Sumio Abekawa, Daiwa Bank's president, received a letter on July 18th 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 óD 123 billion) 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 (FRB) 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?
Functional Area : Finance & Investments
Strategy & General Management

Issues: This case illustrates the importance of complying with the requisite regulations in the context of a major foreign bank operating in the United States, particularly in relation to the issues of disclosure, reporting requirements and directors' liability. The case also allows students a chance to appreciate the potential impact of Japanese and American cultural differences on international business practices.
Length: Text: 7 pages
Exhibits: 8 pages
Country: Japan

Pub. Year: 2005 Level of Difficulty: 3
This product type is available in the following language(s):      English   Simplified Chinese
Related Information: Ref: 05/269C - A Rogue Trader at Daiwa Bank (B): The Board Meeting on September 25th 1995 in Japan
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