Word: traders
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Dates: during 1990-1999
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Toshide Iguchi, the former Daiwa Bank bond trader at the center of $1.1 billion in losses, stunned a Manhattan courtroom today by accusing at least two senior Daiwa managers of urging him to continue a coverup as recently as a month ago. "This just keeps getting worse and worse," says New York bureau chief John Moody. "The first thing it will probably affect is the Federal Reserve's plan to buy Treasury bonds from the Japanese. We will look awfully naive using taxpayer money to bail out Japanese banks if those banks are playing games with us. It will also...
...spectacular allegations put Iguchi in the company of a rogues' gallery of high rollers accused of vast secret transactions that have rocked their firms in the 1990s, spurring some companies to tighten oversight of trading desks. Iguchi's closest kin in scandal is Nicholas Leeson, the Singapore-based derivatives trader who racked up $1.4 billion in hidden losses that broke Britain's Barings Bank when they came to light last February. Like Leeson, Iguchi was simultaneously in charge of making trades and recording them in his firm's back office--a combination that enabled him to conceal the true nature...
...gigantic scope of Iguchi's fraud, and the bank's seemingly lackadaisical response even after it surfaced, raised questions on Wall Street about whether the 44-year-old trader--whose nicknames were "Tosh" and "Toshy"--had acted alone or with the help of friends in high places at the bank. It was noted that nearly two months passed between the time Iguchi blew the whistle on himself in a July 13 letter to bank president Akira Fujita and the time Daiwa informed authorities on Sept. 18--despite the fact that U.S. state and federal regulations require banks to give immediate...
...some Wall Street experts said the delay looked suspicious and improper. "That is not acceptable behavior in our view," says Heinz Binggeli, managing director of Emcor Risk Management, a consulting firm. "You don't let two months pass before you shut down the operation." Says the chief government-bond trader for a large Wall Street firm: "This went on undetected for 11 years? Come on, who's kidding whom? It's a joke...
After briefly selling used cars, Iguchi joined Daiwa in New York City and spent eight years handling back-office paperwork for government-bond trading. He was promoted to trader in 1984 and, because the office was a small one, remained in charge of keeping the books. But things took a wrong turn from the get-go when Iguchi lost an estimated $200,000 trading bonds and allegedly recouped it through his illegal scheme. "We had great expectations for him, and so he felt obliged to keep going instead of coming clean," says Kenji Yasui, a Daiwa deputy president...