Japan's financial community is reeling after it was discovered Tuesday that a trader for Daiwa Bank lost more than $1 billion on bond transactions. "In financial terms, it isn't the worst thing that could have happened," says New York bureau chief John Moody. "But the embarassment is significant and the timing could not have been worse, because there is a very shaky feeling right now in the Japanese financial community." Toshihide Iguchi, an executive with Daiwa's New York office, has been charged with falsifying records in connection with $1.1 billion in losses for the Japanese bank. If convicted, Iguchi faces a maximum sentence of 30 years in prison and $1 million in fines. The incident is reminiscent of the collapse of Barings Bank, where another rogue trader, Nicholas Leeson, caused the collapse of Britain's oldest merchant bank. Thanks to Daiwa's size, it is in no danger of collapsing.