Yamaichi Securities
| Company type | Private |
|---|---|
| Industry | Securities trading |
| Founded | 1897 |
| Defunct | June 2, 1999 |
| Fate | Bankruptcy |
| Headquarters | Tokyo , Japan |
was a Japanese firm specializing in securities trading. It announced the termination of its operations on November 24, 1997, and was officially declared bankrupt by the Tokyo District Court on June 2, 1999.
History
Established in 1897, Yamaichi was once recognized as one of Japan's top four brokerage firms, catering to leading Japanese corporations.
Throughout the economic boom of the 1980s, Yamaichi managed specific investment funds for ten clients. Nevertheless, the severe market downturn in the early 1990s, coupled with unsuccessful trading activities, led to losses surpassing 200 billion yen. To safeguard its reputation and maintain client trust, Yamaichi concealed these losses off its balance sheet.
In 1990, Yamaichi made a private placement of $191 million into Touchwood Pacific Partners, a limited partnership consisting of approximately fifty Japanese institutional and private investors. This partnership was involved in financing film production in collaboration with The Walt Disney Company.
Tobashi scheme and downfall
In January 1992, Yamaichi's management executed a tobashi scheme by establishing Yamaichi Enterprise, which opened an account at Credit Suisse’s Tokyo branch. The subsidiary deposited ¥200 billion in Japanese government bonds and utilized shell companies to fabricate client profits while shouldering losses amounting to ¥158.3 billion. Additionally, another arrangement involving foreign currency bonds masked losses totaling ¥106.5 billion within Yamaichi’s Australian subsidiary.
The fraudulent activities came to light through an investigation by Weekly Toyo Keizai in April 1997, which earned the publication the Editors' Choice Magazine Journalism Award.
At a hearing before the Japanese Diet, then-chairman Tsugio Yukihira acknowledged that these operations were unlawful. He revealed that only three executives were aware of the schemes but refrained from disclosing the identities of the ten firms implicated. Following this scandal, Yamaichi halted its business on November 24, 1997, and was declared bankrupt by the Tokyo District Court on June 2, 1999.
Shohei Nozawa, the final president of the company, publicly apologized on television. In response, Japan's Minister of Finance committed to implementing measures aimed at preventing further disruptions to the banking sector and overall economy. On June 1, 2001, Yukihira reached a settlement in a lawsuit accusing him of orchestrating window-dressing tobashi schemes and engaging in illegal transactions that contributed to Yamaichi's collapse.
External links
- 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
- Companies formerly listed on the Tokyo Stock Exchange