Sign in Subscribe
Commercial banks

Sumitomo Sues UBS and Chase Manhattan for Damages in Copper Derivatives Scandal

Strategic Insights

— 1 min read

Sumitomo, a Japanese trading company, has filed lawsuits in Tokyo and New York against UBS and Chase Manhattan Bank, seeking a total of Y91.7bn (£460m) in damages. The lawsuits claim that the banks provided unauthorised loans to Yasuo Hamanaka, Sumitomo's former chief copper trader, through complicated derivatives transactions. Hamanaka was involved in a decade-long illicit copper trade scandal, which led to a plunge in copper prices and significant losses for Sumitomo. The company alleges that the banks were aware of Hamanaka's unauthorised activities and helped him continue his secret deals.

Key Takeaways:

  • Sumitomo alleges that UBS and Chase Manhattan Bank provided unauthorised loans to Yasuo Hamanaka through derivatives transactions, amounting to over $750m.
  • The company claims that the banks were aware of Hamanaka's unauthorised activities and helped him continue his secret deals.
  • Sumitomo seeks Y91.7bn (£460m) in damages from UBS and Chase Manhattan Bank in connection with the scandal.
  • Yasuo Hamanaka, the former chief copper trader for Sumitomo, has been sentenced to eight years in prison for fraud and forgery related to illegal copper trades.
  • The copper scandal led to a plunge in copper prices and significant losses for Sumitomo, with the company incurring Y285bn in losses.
  • Sumitomo has faced a number of lawsuits since the scandal, including a potentially devastating loss of its US and UK commodities market access.

Statistics:

  • Sumitomo seeks Y91.7bn (£460m) in damages from UBS and Chase Manhattan Bank.
  • The company alleges that the banks provided unauthorised loans amounting to over $750m (£635m since March 1996, including more than $250m from UBS and $500m from Chase Manhattan Bank).
  • Sumitomo incurred Y285bn in losses as a result of the illegal copper trades.
  • Yasuo Hamanaka, the former chief copper trader, has been sentenced to eight years in prison.
  • The copper scandal led to a significant plunge in copper prices.

Sources:

  • "Sumitomo Sues UBS and Chase Manhattan Bank for Damages", Financial Times, 1999.

Read more