Mitsubishi Loses $320m to Rogue Oil Trades – Ex-Trader Denies Claims

10 October 2019: Mitsubishi in Singapore has launched an investigation after it found that one of its employees had been taking unauthorised derivative positions, resulting in losses of $320m. 

In a statement issued by Mitsubishi, it said that the employee (a local hire in charge of crude transactions with China at a subsidiary called Petro Diamond Singapore) “was discovered to have been repeatedly engaging in unauthorized derivatives transactions and disguising them to look like hedge transactions since January of this year”. A sudden fall in crude prices meant the employee’s actions caused large losses for the company, which subsequently launched an investigation in mid-August.

This is the first loss of its kind for Mitsubishi which quickly closed the derivatives position and carried out an investigation, resulting in the dismissal of the individual. Investigations are ongoing and Mitsubishi Singapore has filed a complaint with the police. 

The ex-trader has since responded to the claims, stating that “he had not engaged in unauthorised trades in crude oil derivatives”, suggesting instead that the losses were the result of decisions made by the company. However, Mitsubishi said that its “understanding of the facts [are] exactly how we described them” in their original statement to the press.

The significant loss, which was allegedly caused by just one employee, highlights the continued challenge of insider risk and the broader threat it poses to large financial organisations.