was a Japanese

securities trading A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

firm. The company announced it would cease operations on November 24, 1997 and was declared bankrupt by the

Tokyo District Court is a district court located at 1-1-4 Kasumigaseki, Chiyoda, Tokyo, Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the ...

on June 2, 1999.

History

Yamaichi, formed in 1897, was at one time one of the four major Japanese brokerages. Its clients were major Japanese corporations. In the boom of the 1980s it was given specified sums of money by 10 of its clients to invest as it saw fit. A sharp downturn in the early 1990s and poor dealings by Yamaichi generated losses of more than 200 billion yen. Fearing the demise of the firm through loss of reputation that would result if the scale of losses became known, the brokerage shouldered the loss of its clients, and moved it off balance sheet. Yamaichi sold in a private placement

Touchwood Pacific Partners Touchwood Pacific Partners I was an American film financing limited partnership formed by The Walt Disney Company in 1990 for its then three production companies, Walt Disney Pictures, Touchstone Pictures and Hollywood Pictures, but owned by Yamai ...

limited partnership to about 50 Japanese institutional or private investors in the amount of $191 million in 1990 for

The Walt Disney Company The Walt Disney Company, commonly known as Disney (), is an American multinational mass media and entertainment industry, entertainment conglomerate (company), conglomerate headquartered at the Walt Disney Studios (Burbank), Walt Disney Stud ...

film production.

''Tobashi'' and collapse

In January 1992, Yamaichi executives resorted to such a ''tobashi'' scheme, setting up a separate company called Yamaichi Enterprise which opened an account at the

Tokyo Tokyo (; ja, 東京, , ), officially the Tokyo Metropolis ( ja, 東京都, label=none, ), is the capital and List of cities in Japan, largest city of Japan. Formerly known as Edo, its metropolitan area () is the most populous in the world, ...

branch of

Zürich , neighboring_municipalities = Adliswil, Dübendorf, Fällanden, Kilchberg, Maur, Oberengstringen, Opfikon, Regensdorf, Rümlang, Schlieren, Stallikon, Uitikon, Urdorf, Wallisellen, Zollikon , twintowns = Kunming, San Francisco Zürich ...

, Switzerland-based Credit Suisse. Depositing ¥200 billion in Japanese government bonds, the Yamaichi subsidiary then used the dummy companies to generate profits for clients while eventually absorbing losses of ¥158.3 billion. A separate scheme using foreign

currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general ...

bonds resulted in losses of ¥106.5 billion being hidden in Yamaichi's Australian subsidiary. The magazine ''

Weekly Toyo Keizai ''Weekly Toyo Keizai'' ( is a weekly business and finance magazine published in Tokyo, Japan. Founded in 1895 it is one of the earliest business publications in the country. History and profile The magazine was established in 1895 under the name ...

'' uncovered the fraud in April 1997. For its journalism the magazine was awarded the

Editors' Choice Magazine Journalism Award The is an annual prize for journalism awarded by a coalition of Japanese publishing companies since 1995. Participating companies include mainstream publishers like Kodansha, Shinchosha, and Bungeishunjū is a Japanese publishing company kno ...

. Tsugio Yukihira, chairman of the brokerage at the time of its collapse, acknowledged in front of a Japanese Diet hearing that the activities were illegal. He said that only three people at the brokerage, namely himself former President Atsuo Miki and another individual, knew about the arrangements; he declined to name the 10 firms involved in the illegal trading. The company announced it would cease operations on November 24, 1997 and was declared bankrupt by the

on June 2, 1999. The company's last president, Shohei Nozawa made a tearful public apology on Japanese television. Japan's Minister of Finance announced that steps would be taken to ensure the event would not further destabilize the frail Japanese banking system and economy as a whole. On June 1, 2001, the company's last chairman, Tsugio Yukihira, settled a lawsuit filed in Tokyo District Court. Suitors alleged his window-dressing tobashi schemes and illegal dealings had undermined the brokerage and led to its demise.

References

External links

Statement by the Governor of the Bank of Japan
{{Authority control Financial services companies based in Tokyo Financial services companies established in 1897 Financial services companies disestablished in 1999 Japanese companies established in 1897 Companies that have filed for bankruptcy in Japan Japanese companies disestablished in 1999