May 20, 2022
Oil field

A rogue trader at Mitsubishi’s Singapore-based subsidiary Petro-Diamond Singapore (PDS) has cost the company at least $320 million by placing unauthorized bets on the oil market which went wrong.

Mitsubishi Corp. announced the loss in a statement, saying the employee had been hired by PDS to oversee oil trade with China.

The trader “was discovered to have been repeatedly engaging in unauthorized derivatives transactions and disguising them to look like hedge transactions since January of this year.”

PDS had begun investigating the employee’s transactions whilst he was absent from work in mid-August, and discovered the disguised transactions. The unauthorized trades were initially profitable before losses began accumulating as crude oil prices fell sharply in July.

The derivatives positions have been closed, but Mitsubishi warned that the cost of the trades could continue to rise as they determine the impact of transaction fees and other factors.

“Although PDS has already closed the position in question and determined how much was lost on the underlying derivatives, we are now examining the total amount of losses,” it said.

The finalized total loss will count toward derivatives-related losses in Mitsubishi Corp.’s July-September results.

Mitsubishi confirmed that the employee in question has already been fired, and that a complaint has been filed with police.

The amount lost by the rogue trader is by no means the biggest in history. That honor belongs to Jerome Kerviel, who cost French bank Societe Generale (SCGLF) over $6 billion in the early 2000s.