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Chapter 14. Betting the Bank > Toshihide Iguchi and Daiwa Bank

Toshihide Iguchi and Daiwa Bank

Although Toshihide Iguchi was born in Kobe, Japan, he moved to the United States after high school and attended Southwest Missouri State University. He graduated in 1975 with a psychology degree and later became a U.S. citizen. Soon Iguchi joined the New York operations of Daiwa Bank. He spent eight years handling the back-office bookkeeping and accounting for its government-bond trading activities. Finally, in 1984, Iguchi was promoted to bond trader. Since the operation was small, he traded the government bonds and kept the books. Sound familiar?

Almost immediately, Iguchi's trading lost $200,000. Instead of admitting his mistake to his boss, he decided to hide it. Controlling both the trading and the bookkeeping made this relatively easy for him. To earn back the losses, Iguchi began taking larger positions and trading more bonds, eventually trading as much as $500 million in a single day.[4] Over time, he escalated his commitment by taking larger positions in order to recoup the mounting losses. Through manipulation of the books, Iguchi was actually reporting profits, not losses, to his boss. At one point, his trading operation produced half the New York branch's profits for the year. Of course, the profits were fictional.


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