[PEN-L:4704] Sumitomo winner of 1996 Barings Award

[D Shniad <shniad@xxxxxx>]

The Sumitomo conglomerate has been selected as the 1996 winner of the
Barings Bank Award for providing case evidence that the unregulated
market functions best without government control or intervention.
Nominations are now being taken for the 1997 Award.

Sid Shniad

The Financial Times, London			June 17 1996

GLOBAL COPPER SUPPORT IN WAKE OF SUMITOMO LOSS

A co-ordinated effort, involving central banks and regulators in the UK,
US and Japan, has been launched to prevent a copper market collapse in
the wake of Sumitomo Corporation's revelation that a senior trader
concealed losses of $1.8bn.

The banks and regulators are hoping to restore reasonable stability to the
London Metal Exchange's copper market and prevent a potentially
disastrous drop in the metal's price that would have financial
repercussions around the world.

The efforts - understood to involve the Bank of England, the Bank of
Japan and regulatory authorities in the UK and the US - were intensified
at the weekend because pressure on prices will reach a peak today. For
technical reasons, much of this month's futures business will be completed
in a few hours this morning.

Meanwhile, Sumitomo Corporation was forced to deny yesterday that its
president, Mr. Tomiichi Akiyama, was planning to "virtually resign" as a
way of taking responsibility for the losses. There were previously reports
that Mr Akiyama planned to retreat to an advisory post, depending on
how the investigation by US and British authorities developed.

It is believed the main thrust of the international effort is to achieve a
behind-the-scenes settlement of Sumitomo's outstanding contracts on
agreed terms. Traders suggested the Japanese group had contracts on
between 50,000 and 100,000 tonnes of copper to be unwound.

If a settlement could be agreed, it would prevent a resumption of the
ferocious battle for supremacy in the LME's copper market that has been
going on for some weeks between US hedge funds, intent on driving the
price down, and Sumitomo which, when Mr Yasuo Hamanaka, its former
senior trader, was in charge, was determined to keep the price up.

Traders pointed out yesterday that the US funds - Mr George Soros's
Quantum fund and Mr Julian Robertson's Tiger fund - did not necessarily
have the upper hand. Sumitomo had other competent traders apart from
Mr Hamanaka and control of a substantial part of the LME copper stocks.

One trader pointed out: "Sumitomo's president has contacted all
counterparties to reassure them that all his group's outstanding obligations
will be met, but he has no reason to let Sumitomo be taken to the cleaners
by the funds.

"To use a military analogy, as a defending force you don't roll over
against an attacking force, you make sure you take a few of them with
you."

Meanwhile, Mr David King, the LME's chief executive, again yesterday
denied that he had not taken action in 1991 when a London trader
reported that Mr Hamanaka had asked for a backdated invoice for a
fictitious copper trade.

Mr King said the documents were passed by the LME to the UK
Securities Investment Board and the Securities and Futures Authority and
discussions also took place with Sumitomo. But he was not at liberty to
reveal the outcome.

"When the dust settles, there will be a good story to tell of regulatory and
investigative systems working very well indeed," Mr King said.