JAPANESE securities house Sumitomo Corporation has agreed to pay the UK financial markets regulator, the Financial Services Authority (FSA), #5m to compensate for alleged damage to British markets following unauthorised trades by Sumitomo's former head copper dealer, Yasuo Hamanaka.
The trading giant had run up losses of around $2600m through these unauthorised deals.
The FSA said Sumitomo had co-operated with it throughout its investigation into the copper market and ''no purpose would be served by further consideration of possible use of its enforcement powers against Sumitomo in relation to Hamanaka''.
Regulators in the UK and US have been investigating Sumitomo and several other companies following the disclosure of the trading losses.
Sumitomo said yesterday that, while it did not admit the FSA's allegations were true, it had voluntarily agreed to contribute to the regulator's costs, and that all claims against the company had been resolved.
The FSA said it continued to co-operate with the Securities and Futures Authority (SFA) and London Metal Exchange (LME) ''regarding the finalisation of investigations and involvement in Hamanaka's activities of UK regulated firms and individuals''.
An SFA spokesman said the investigation was continuing but declined to speculate how long it would take.
Sumitomo said yesterday it had also agreed to pay $125m to the US regulator the CFTC and set aside $25m ''for the potential resolution of claims by private parties in the United States''.
''The total of the two payments, the CFTC alleges, approximates the gain realised by the company through certain of Hamanaka's unauthorised transactions,'' said Sumitomo.
It added that all pending regulatory investigations of the company were now closed and that it would continue to co-operate with US and British investigations into other parties.
''At the same time, the company will, in the US, UK, Japan and elsewhere, vigorously pursue those who helped Hamanaka defraud Sumitomo,'' said Martin London, a partner at Sumitomo's lawyer Paul, Weiss, Rifkind, Wharton & Garrison.
Britain's Serious Fraud Office (SFO) said it had no further comment on its own criminal investigation into the copper market related to the Hamanaka affair.
''The investigation continues, there have been no developments,'' an SFO spokesman said.
The thrust of the SFO action, which was launched in June 1996, is to seek evidence of conspiracy to defraud.
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