Daiwa Securities President Resigns : Brokerage: He takes the blame for pending losses from five expensive settlements.

In an eerie echo of last summer’s financial scandals, the president of Daiwa Securities Co., Japan’s second-largest brokerage, resigned Wednesday after admitting responsibility for shady deals that caused the company’s clients hundreds of millions of dollars in losses.

Daiwa President Masahiro Dozen announced his resignation at a press conference, saying he “apologizes” for a series of deals blamed for customer losses.

Dozen’s resignation came the same day as Tokyu Department Store Co., a Daiwa client, held a separate news conference to announce that its lawsuit against Daiwa had been settled. Daiwa agreed to cover $86 million of $100 million in Tokyu investment losses resulting from a murky Daiwa deal.

Daiwa’s new president, Motoo Esaka, said the company will write off about $565 million this fiscal year to settle five similar disputes and will show a $330 million operating loss for the year that ends March 31.

Daiwa’s problem is rooted in the same circumstances that sparked the securities scandals last summer: written or implied promises to corporate clients that their stock investments in special accounts would grow at a guaranteed rate.

Last summer, the presidents of Nikko Securities Co. and Nomura Securities resigned after they were found to have spent hundreds of millions of dollars compensating clients for stock market losses in such accounts.

Daiwa’s problems arose from a particularly circuitous way of compensating customers called “tobashi,” in which a broker transfers stock from one customer account to another at artificially high prices to prevent the first customer from having to record large losses. The hope is that if the game of financial musical chairs goes on long enough, a stock market recovery will ultimately close the gap and the problem will disappear.

A prolonged slump in the stock market since early 1990, however, has made such practices unworkable. The last client to receive the shares is left with stocks whose real value is far below the price that had been paid for them, making the stocks difficult to pass on.

In the most recent case, Tokyu agreed to buy $700 million worth of shares from seven different Daiwa clients in July 1991 on the understanding that Daiwa would find customers to buy back the shares in November for $709 million. Daiwa failed to find someone willing to buy back the shares, however, and Tokyu was left with stock that had a market value of less than half of its purchase price.

Dozen said he would stay on at Daiwa as a director following his resignation.