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After briefly selling used cars, Iguchi joined Daiwa in New York City and spent eight years handling back-office paperwork for government-bond trading. He was promoted to trader in 1984 and, because the office was a small one, remained in charge of keeping the books. But things took a wrong turn from the get-go when Iguchi lost an estimated $200,000 trading bonds and allegedly recouped it through his illegal scheme. "We had great expectations for him, and so he felt obliged to keep going instead of coming clean," says Kenji Yasui, a Daiwa deputy president.
Iguchi grew bolder and bolder, reportedly trading as much as $500 million worth of bonds in a single day. But by late 1993, Iguchi was finding it increasingly difficult to dip into Daiwa's bond accounts to make up for losses. That year, Daiwa split up the bond-trading and record-keeping functions in its New York offices. In his letter to bank president Fujita, Iguchi reportedly said the change had made it hard to continue concealing his losses. Yet the very fact that Iguchi kept up the deception for two years more heightened suspicions on Wall Street that someone within the bank helped him carry out the fraud.
Like Leeson, Iguchi may have gone unchecked for so long because he regularly reported profits. "This scandal brings to light a culture on Wall Street," says Cohen of Hermes Capital. "In all trading rooms--in banks, in securities firms--when people make money, you leave them alone. No one wants to upset the apple cart." Not until the apples turn out to be rotten.
--Reported by Edward W. Desmond/Tokyo and Barbara Rudolph/New York