Management Responsibility Under Different Jurisprudential Systems, Practices and Cultures; The Board Meeting on September 25th 1995 in Japan
Author: Misawa, Mitsuru
Source: University of Hong Kong
Company Name: Daiwa Bank
Number of pages: 15, 4
In 1995, Sumio Abekawa, Daiwa Bank's president, received a letter on July 18 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 $1.1 billion (approximately 123 billion yen) through the unauthorized 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 New York (FRB) and the New York State Banking Department. The bank directors faced several questions: Had the bank taken the appropriate steps to comply with U.S. reporting requirements? What was 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?