Daiwa Bank Investigation

1995NY Federal Reserve$1.1 Billion Loss

As part of Arthur Andersen specialist investigation team, I contributed to the forensic investigation commissioned by the Federal Reserve Bank of New York into one of the largest unauthorized trading losses in banking history.

investigation_overview.txt

Investigation Overview

The Scandal

• $1.1 billion in unauthorized trading losses
• Perpetrated by Toshihide Iguchi in New York office
• Losses concealed over multiple years (1984-1995)
• Involved unauthorized sale of customer securities
• Bank management attempted cover-up after discovery

Investigation Timeline

• July 17, 1995: Iguchi confessed to bank president
• September 18, 1995: Losses reported to Federal Reserve
• October 2, 1995: Fed ordered closure of US operations
• November 2, 1995: 24-count federal indictment filed
• Investigation team included Arthur Andersen specialists

Key Investigation Findings

The investigation revealed systematic failures in oversight, internal controls, and regulatory compliance:

• Over $375 million in unauthorized customer securities sales
• Bank submitted false financial statements to Federal Reserve
• Management failed to report criminal activity to authorities
• Complete breakdown of segregation of duties and controls
• Institutional attempt to conceal losses after discovery

criminal_charges.txt

Criminal Charges & Consequences

Federal Charges

24-Count Federal Indictment

• Conspiracy to defraud Federal Reserve
• Mail and wire fraud
• Obstructing examination of financial institution
• Falsification of bank records
• Misprision of felonies

Regulatory Actions

Daiwa Bank expelled from all US operations by February 1996
Federal and state enforcement orders issued
International diplomatic incident between US and Japan
CEO resignation and criminal convictions

impact_and_legacy.txt

Impact & Legacy

🏛️

Regulatory Strengthening

Enhanced Federal Reserve oversight and reporting requirements for foreign banks operating in the US.

🔍

Forensic Standards

Investigation methodology became template for major financial institution fraud investigations

🌐

International Cooperation

Strengthened international banking supervision and cross-border regulatory cooperation protocols

methodology.txt

Investigation Methodology

Technical Expertise

Financial InvestigationForensic AccountingRegulatory InvestigationBanking OperationsFraud Analysis

Investigation Focus Areas

• Forensic analysis of trading records and positions
• Documentation of unauthorized securities transactions
• Assessment of internal control failures
• Analysis of management knowledge and response
• Evaluation of regulatory compliance breaches

references.txt

References & Further Reading

Criminal Complaint & Indictment Against Daiwa Bank

Complete legal documentation of the federal charges

Federal Reserve: Termination of Enforcement Orders

Official Federal Reserve documentation on case resolution

International Banking Scandal Analysis

Contemporary analysis of the Daiwa Bank scandal and its implications

Press Release: Criminal Indictment of Daiwa Bank

Original press release announcing the federal criminal charges