Mitsubishi to liquidate subsidiary affected by rogue derivatives trading

Maria Nikolova

PDS will be liquidated once it has completed its contracted trade of crude oil and petroleum products and its credits and debts have been settled.

Mitsubishi Corporation has earlier today announced it will liquidate Petro-Diamond Singapore (Pte) Ltd, the business which has been affected by the rogue trading of derivatives.

As Mitsubishi confirmed on September 20, an employee who was hired by PDS engaged in a series of unauthorized crude-oil derivatives transactions over an extended period. PDS has confirmed that after closing the positions concerned, it will realize a loss of approximately 34.2 billion yen before taxes, which could put the subsidiary’s final debt as high as 30.8 billion yen.

Mitsubishi will liquidate PDS once the subsidiary has completed its contracted trade of crude oil and petroleum products and its credits and debts have been settled.

In consultation with all concerned parties, PDS is poised to fulfill its remaining contractual obligations for the trade of crude oil, naphtha and petroleum products. Meanwhile, Mitsubishi Corporation will continue its overseas crude oil / naphtha / petroleum products operations once it has reconfirmed that its risk management systems are both sound and thoroughly enforced, taking all possible measures to prevent similar incidents from occurring in the future.

All Mitsubishi Corporation’s subsidiaries are expected to tighten their risk management and are committed to preventing any recurrences of this incident.

The rogue trader is an employee who was hired locally by PDS to handle its crude oil trade with China. The employee was discovered to have been repeatedly engaging in unauthorized derivatives transactions and disguising them to look like hedge transactions since January 2019. Because the employee was manipulating data in PDS’s risk-management system, the derivatives transactions appeared to be associated with actual transactions with PDS’s customers.

Since July, the price of crude oil has been dropping, leading to heavy losses from derivatives trading. PDS began investigating the employee’s transactions during his absence from work in the middle of August, and that is when the unauthorized transactions were detected.

After finding out that the transactions could result in a loss for PDS, MC and PDS immediately consulted with an outside lawyer and established an investigation team, including local outside experts, to gain an overall picture of the situation and identify the causes. PDS terminated the employment contract of the rogue trader on September 18, 2019.

Read this next


Exclusive: Autochartist CEO Ilan Azbel Delivers Insight on AI at iFX EXPO LATAM 2024

In an insightful interview with FinanceFeeds at iFX EXPO LATAM 2024, Ilan Azbel, CEO of Autochartist, discussed the evolution of trading technology, effective trader engagement strategies, the integration of AI in trading analytics, and the cautious approach of regulated brokers towards its adoption.

Market News

Weekly data: Oil and Gold: Price review for the week ahead.

This preview of weekly data looks at USOIL and XAUUSD where economic data coming up later this week are the main market drivers for the near short-term outlook.

Crypto Insider

Octa’s insights: the approval of spot Ethereum ETFs is not going as planned.

The approval of spot Bitcoin exchange-traded funds (ETF) by the U.S. Securities and Exchange Commission (SEC) in January 2024 triggered a substantial rise in the bitcoin price. Also, interest in the proposed spot Ethereum ETF has increased

Industry News

Bursa Malaysia introduces Trading Reminders

The Trading Reminder flag aims to alert investors to exercise caution when encountering a stock displaying persistent unusual price and/or volume movements after the listed company’s UMA response.

Industry News

21 Republican representatives want to “End the Fed”

“Americans are suffering under crippling inflation, and the Federal Reserve is to blame.”

Retail FX

Scope Markets launches unleveraged trading

“Whilst our traditional contract for difference (CFD) products continue to prove incredibly popular, the Invest account is unleveraged and only allows ‘long’ positions to be taken, a combination that significantly reduces the risk of capital losses.”


Unlocking Profit Potential: Earn Returns with DecodeEX Experience Bonus!

DecodeEX, the innovative brokerage subsidiary of Decode Global, announced its experience bonus campaign, offering every user the opportunity to maximize their strategic trading potential with up to $10,000 in experience bonus. 

Market News

Pretiorates’ Thoughts 28 – Precious metals and base metals out of control

Ten days ago we mentioned in Pretiorates’ Thoughts 26: Chapter 2 should start with Precious Metals.

Retail FX

Webull launches discount brokerage in Malaysia

“Making investing more inclusive and accessible to all, Webull Malaysia brings best-in-class tools and information to empower investors of all levels with knowledge and skills to help them make better investment decisions and achieve their investment goals.”