Japan's biggest trading house by revenue says matter has been referred to police and the trader in question has been sacked, but the loss raises serious questions about compliance standards.
Share to twitterThe recent and much talked about $320 million rogue trade on bad oil bets at a subsidiary of Japan's biggest trading house by revenue Mitsubishi Corp. is by no means the world's largest in terms of moneys lost, but that doesn't make it any less embarrassing for Japan Inc.
And it could get worse, as PDS is still examining the total amount of losses."Although PDS has already closed the position in question and determined how much was lost on the underlying derivatives, we are now examining the total amount of losses." When Sumitomo's internal audit was completed in 1996, Hamanaka – who earned his nickname from the percentage of the world's yearly copper supply he was once purportedly controlled – had. It earned Hamanaka an eight-year jail term, and perhaps a custodial sentence awaits the errant trader alleged to have carried out the rouge oil derivatives bets.
The question marks are over its compliance mechanisms that failed to spot the rogue trades. Commentators in Mitsubishi's home market are asking the same with a senior trader at the Tokyo Stock Exchange telling your correspondent:"This kind of breach of risk management systems and compliance, automated or otherwise, just shouldn't happen at Japanese trading houses."
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