Sumitomo Corporation of Japan - The Commodity Derivatives Fiasco


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:
Case Code : FINC029 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

EVA Financial concepts
Case Length : 13 Pages
Period : 1996 - 2004
Pub. Date : 2004
Teaching Note : Not Available
Organization : Sumitomo Corporation
Industry : Financial Trading, Minerals
Countries : Japan

Abstract:

The case discusses how Yasuo Hamanaka (Hamanaka), the chief copper trader at Japan's Sumitomo Corporation caused major losses to the company through his unauthorized trading activities in the physical and futures market in copper at the London Metal Exchange.

It traces the complete sequence of events leading to the revelation of the scandal.

The case also highlights the reasons for the copper debacle, including the lack of proper managerial supervision and operational control systems and the misuse of authority by Hamanaka.

Issues:

» Analyze the reasons that led to the huge losses of Sumitomo Corporation

» Importance of proper supervision and control systems in a trading firm to mitigate risks

Contents:

  Page No.
Introduction 1
Background Note 2
Events Leading to the Debacle 3
Why Did it Happen? 5
The End Result 6
Exhibits 8

Keywords:

Yasuo Hamanaka, chief, copper, trader, Sumitomo Corporation, unauthorized trading, physical, futures market, copper, London Metal Exchange, revelation, copper debacle, managerial supervision, operational control systems, misuse, authority

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