Costly copper

Merrill Lynch, the US investment bank, has agreed to pay Sumitomo Corporation US$275 million in partial recompense for US$2.6 billion losses which the Japanese group incurred through unauthorised copper trading by one of its employees. Yasuo Hamanaka engaged in illegal trading for more than ten years; he was sentenced to eight years in prison for fraud and forgery in 1998. The US bank insisted that the payment was not an admission that it should have known that the trades were unauthorised but it is one of the largest settlements seen in Japan. Four other foreign banks, JP Morgan, Credit Lyonnais, Chase Manhattan and UBS, still face claims from Sumitomo totalling around US$1.6 billion.