Mitsubishi Corp. lost as much as $320 million because of rogue trader, company says
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A series of unauthorized high-risk trades caused multimillion-dollar losses at Japan’s largest trading firm, Mitsubishi Corp. announced Friday in a prepared statement.
The company realized that it had a major loss after discovering an unnamed employee had been “repeatedly engaging in unauthorized derivatives transactions” since January 2019.
Declining crude oil prices in July and August led to large losses from derivative trading, and Mitsubishi established an investigation team to understand the situation, according to the statement. The unnamed employee allegedly at fault was fired Wednesday.
The firm closed the position and is still determining its total losses, but the company stated that it expects to book a loss of about $320 million. Mitsubishi projected earlier this year that it would profit approximately $5.56 billion in the fiscal year ending March 2020.
“How the losses will impact MC’s forecast for FY2019 is under investigation and shall be announced if and when a performance review is necessary,” according to the company.
The statement explained that the employee was independently hired by Mitsubishi’s Petro-Diamond Singapore, or PDS, subsidiary to handle the firm’s crude oil trade with China.
“Because the employee was manipulating data in PDS’s risk-management system, the derivatives transactions appeared to be associated with actual transactions with PDS’s customers,” the company said.
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Mitsubishi has filed a criminal complaint against the rogue trader and took steps to “determine whether or not any similar improprieties have been taking place” at any of the group’s other companies. according to the company. The internal risk management investigation team concluded that “there are no such problems or risks at present.”