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Sumitomo sues Chase, UBS
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June 3, 1999: 7:31 a.m. ET
Japanese bank seeks $760M for alleged copper-trade abuses; UBS rejects claim
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LONDON (CNNfn) - Japan's Sumitomo Corp. launched a $760 million lawsuit against Chase Manhattan and UBS Thursday in a bid to recover part of the $2.6 billion lost by a rogue copper trader in 1995.
Sumitomo alleges that the two banks improperly lent funds to its chief metal trader, Yasuo Hamanaka, known in the commodities market as "Mr. Copper".
The accusation drew a swift repudiation from Union Bank of Switzerland, known as UBS AG since its merger last year with Swiss Bank Corp.
But the bank declined Thursday to elaborate on the nature of its past relationship with Sumitomo, apart from a broad acknowledgment that the bank had been involved in commodities trading in the past.
"UBS disputes Sumitomo's right to claim any amount whatsoever in connection with the transactions carried out in the past," bank spokeswoman Monika Dunant told CNNfn.com.
But Reuters news service quoted a UBS spokesman in Tokyo saying: "Once the crisis broke and the copper trades collapsed in 1996, the former UBS gave Sumitomo considerable assistance with the placement of open contracts in the market."
The Tokyo spokesman insisted UBS had cooperated with authorities in probes undertaken in London, Switzerland and Tokyo in the wake of the copper crisis.
A Chase Manhattan spokesman in London said the company would not issue a formal reply until officials at the bank's headquarters in New York had a chance to familiarize themselves with the suit.
The Japanese bank is seeking damages of at least $530 million from Chase, which it alleges lent Hamanaka more than $500 million despite being fully aware that the borrowings were unauthorized. The charges have been brought in a New York district court.
UBS is being sued for 27.9 billion yen ($231 million) in a Tokyo court on similar charges after lending Hamanaka more than $250 million.
The trader admitted charges of forgery and fraud after a series of illegal trades and was jailed in Japan in 1996. Sumitomo was also a co-defendant with Morgan Stanley in a class-action lawsuit related to the scandal, a suit that Sumitomo eventually settled. Merrill Lynch's role is under investigation by U.S. authorities.
-- from staff and wire reports
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Chase Manhattan
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