Daiwa's trader lost $1.1B over 11 years — the US shut the bank down

Toshihide Iguchi, a bond trader at Daiwa Bank's New York operation, ran unauthorised trades in US Treasury securities from 1983 to 1995 and lost $1.1 billion. He covered the losses by selling $377 million of customers' securities held in sub-custody accounts and $733 million of the bank's own investment securities, and forged 30,000 trading slips along the way. A Congressional Research Service review later found that Daiwa managers directed that the losses be concealed from US regulators.

On 1 November 1995 the Federal Reserve issued an order, made by consent, terminating Daiwa Bank's United States banking activities; the next day US authorities brought a 24-count criminal indictment. Daiwa pleaded guilty in February 1996 to 16 counts of covering up the losses and agreed to pay a record $340 million fine — the largest ever imposed on a financial institution at that time. Iguchi, who pleaded guilty and said senior managers had lied to the Fed about his activities, was sentenced on 16 December 1996 to four years in prison, fined $2 million and ordered to repay $570,000.

The exit order stayed in force for seven and a half years — the Federal Reserve terminated it only on 5 May 2003. The trading cost $1.1 billion; the concealment cost the bank its entire American franchise, a criminal record, and the largest fine a financial institution had ever paid.