OSAKA — Eleven former and current executives of Daiwa Bank on Friday appealed a district court ruling ordering them to pay the bank $775 million — some 83 billion yen — in compensation for massive losses stemming from unauthorized securities trading at the bank’s New York branch over an 11-year period from 1984.
The Osaka District Court on Wednesday ordered the 11, including current President Takashi Kaiho, former Chairman Sumio Abekawa, former President Akira Fujita and former New York branch manager Masahiro Tsuda, to come up with the sum.
It is the largest amount ever awarded in a compensation case filed by shareholders against individual executives in Japan.
“The risk management mechanism at the (New York) branch was effectively not functioning,” Presiding Judge Mitsuhiro Ikeda said. He blamed the executives for “making extremely unreasonable, inappropriate management decisions” in failing to swiftly report the illegal trades to U.S. authorities, which resulted in a heavy penalty.
In Wednesday’s ruling, the district court ordered the executives to pay $775 million — $530 million for the losses from the unauthorized trades and $245 million to cover the penalty.
Two individual shareholders and one corporate shareholder in the Osaka-based bank filed the suit on two occasions — November 1995 and May 1996 — against 50 individuals who were on Daiwa’s executive board during the period the unauthorized trading was conducted.
The shareholders had sought a total of $1.45 billion (around 155 billion yen) in compensation to cover around $1.1 billion in losses from the unauthorized deals, 340 million yen in penalties the bank paid in a plea bargain with U.S. prosecutors, and $10 million in lawyers’ fees to strike the plea bargain.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.