Sumitomo copper affair

[1] Hamanaka would state later at his trial in 1997 that his motivation for the scheme was to cover earlier losses, both before and during his promotion to Sumitomo's head copper trader, and not for personal gain.

These tactics successfully hid his activities and Sumitomo promoted him to head copper trader in 1986.

Hamanaka's dealings with David Campbell began in 1989 with a discussion about his intentions of driving up the copper price by cornering the world market.

From 1989 to 1992, Hamanaka conducted significant amounts of business with RST, and became the firm's biggest client.

Hamanaka would then sell the warrants back to the Zambian producer to repeat the cycle.

These transactions allowed Hamanaka to establish the appearance of a real copper business, and to allow him to claim commercial hedging justification to establish large futures positions to supposedly hedge the illusory transactions.

[8][9] Threlkeld had separately received faxes from Hamanaka requesting to document $500 million of non-existent trades on DLT letterhead.

Threlkeld separately confronted two of his employees in the DLT London office, Charles Vincent and Ashley Levett.

[14] By mid-1993, Hamanaka had more than a dozen credit lines with different LME brokers of US$150 million each to maintain his copper positions.

Sumitomo eventually suffered US$2.6 billion in losses from Hamanaka's positions, and a further US$200 million related to subsequent lawsuits on the affair.

[21] In 1997, a Tokyo court found Hamanaka guilty on four counts of forgery and fraud and sentenced him to eight years in jail.

In 1999, Sumitomo sued Merrill Lynch, UBS, Credit-Lyonnais Rouse, and Morgan Stanley for damages in an amount exceeding US$2 billion for aiding and abetting Hamanaka.

[23][24][25] The fact that Sumitomo Corporation were not members of the LME at the time of Hamanaka's dealings meant that, subsequent to the scandal and understanding of his trading activities, the LME undertook a revision of its membership categories and the reporting requirements of its members, so that greater transparency of larger positions held by non-members who trade via broker-members, would help avoid a similar occurrence.