Fuji Bank trader lost $48M betting the dollar would fall — and kept postponing settlement

Fuji Bank was one of Japan's largest banks, part of the Fuyo Group keiretsu. It operated a branch in New York that engaged in foreign exchange trading on the interbank market.

In 1984, Fuji Bank revealed that its New York branch had lost approximately $48 million (11.5 billion yen) from unauthorized foreign exchange forward transactions. The chief currency trader, 32-year-old Hajimu Nakazawa, had been speculating against the dollar since April 1984, betting that the dollar would fall against the yen. When the dollar did not decline as expected, he kept postponing settlements, hoping the market would turn in his favor.

The losses were discovered by Fuji Bank's management in November 1984. Nakazawa was immediately dismissed. The New York branch manager was also demoted. Fuji Bank was forced to absorb the loss, which was significant enough to appear in the bank's financial statements for the fiscal year.

The incident was one of the early major forex trading scandals at a Japanese bank in the United States, and it prompted tighter controls at Japanese bank branches in New York.