Lai See | Rogue bankers are not criminals, says trader who lost US$1.1b

We don't often get the opportunity to chat with a trader who lost US$1.1 billion. That was the misfortune of Toshihide Iguchi, who was jailed for four years in 1996 for unauthorised bond trading at Daiwa Bank in New York.

Iguchi is in Hong Kong to promote his book, in which he explains how he lost the money and how he hid his losses for 12 nerve-wracking years.

Daiwa New York acted as a trustee bank for Japanese funds that bought US stocks. To cover his losses, Iguchi sold the securities the bank held on behalf of its Japanese clients.

Iguchi explains in harrowing detail how he tried and failed to recoup his losses and the torment he faced daily of being discovered. As he says in his book: "The need to make a certain amount of dollars as quickly as possible deprives him [the trader] of the ability to look at the market objectively and as a result, he will break all the rules of trading."

One of the strangest aspects of this awful saga is that Iguchi's main job was to manage the securities custodian department. His bond trading was a sideline he started to make money for the bank and to improve his job prospects. But, as he says: "I was like an amateur fighter going into the ring with the WBC champion."

Along the way, his wife left him and he had to give up his efforts to bring up his two teenage sons. Eventually, he sent a letter explaining his actions to the bank president in the hope that the parent bank in Tokyo would pay to restore the securities and transfer the problem to Japan. He felt betrayed by Daiwa, which turned him over to the US authorities without warning, despite the lengthy assistance he gave it.