The Sumitomo Scandal: Another Embarrassment for UK Regulatory Authorities?
| Published date | 01 April 1996 |
| Pages | 182-184 |
| Date | 01 April 1996 |
| DOI | https://doi.org/10.1108/eb025775 |
| Author | Inga Nasi |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 4 No. 2 — Derivatives
DERIVATIVES
The Sumitomo Scandal: Another Embarrassment
for UK Regulatory Authorities?
Inga Nasi
The world financial market is facing another blow.
Sumitomo, one of Japan's most conservatively
managed companies and the world's largest copper
trader, admitted it had lost an estimated $1.8bn
(£1.2bn) in unauthorised copper dealings over the
past ten years.
In a statement issued by Sumitomo on 13th
June,
1996, it was alleged that the unauthorised
trading was done by its former chief copper trader,
Mr Yasuo Hamanaka. Sumitomo claimed to have
uncovered this fraud on 5th June, 1996.1 The
investigation was first initiated by the London
Metal Exchange (LME) through which Mr Hama-
naka conducted extensive trading for Sumitomo.
The LME's suspicion arose in November 1995
when the price of copper for immediate delivery
was higher than its future price. This is unusual
with copper since the cost of warehousing and
insuring of copper means that its future price is
normally higher. Thus, reporting its suspicion to
the Securities and Futures Authority (SFA) who in
turn contacted the Securities and Investment
Page 182
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