Tobashi scheme

A Tobashi scheme is a financial fraud where a clients losses are hidden by an investment firm by shifting them between the portfolios of other (genuine or fake) clients. Any real client with portfolio losses can therefore have their accounts flattered by this process. This cycling cannot continue indefinitely and so the investment firm itself ends up picking up the cost. As it is ultimately expensive there must be a strong incentive for the investment firm to pursue this activity on behalf of their clients.

In January 1992, Yamaichi executives resorted to such a "tobashi" scheme, setting up a separate company called Yamaichi Enterprise which opened an account at the Tokyo branch of Credit Suisse. Depositing ¥200 billion in Japanese government bonds, the Yamaichi subsidiary then used the dummy companies to generate profits for clients while eventually absorbing losses of ¥158.3 billion. A separate scheme using foreign currency bonds resulted in losses of ¥106.5 billion being hidden in Yamaichi's Australian subsidiary.

In August 1993, Japan's Ministry of Finance inspected 47 financial institutions for "tobashi", all of whom denied the practice. In December the MoF asked for reports from all 289 brokers on "tobashi" activity.

ources

*Euromoney Magazine