Yamaichi Hid Losses, Ex-Exec Says

A former chairman of the now-defunct Yamaichi Securities Co. in Japan has admitted that the company hid losses that contributed to its collapse this week.

The admission came before Japan’s parliament on Thursday.

“If the company had disclosed problem assets, it would not have been able to survive,” former Yamaichi Chairman Tsugio Yukihira told an upper house budget committee in unsworn testimony. “We thought that by producing good results in the future, we would be able to restore trust in the company and see earnings rise.”

Of the $24 billion it had chalked up in liabilities, the company said, about $2.1 billion were losses incurred through an illegal practice known as tobashi, in which favored clients are protected from investment losses.

Yamaichi, the smallest of Japan’s “Big Four” brokerages, collapsed Monday as mounting debts and a slump in Tokyo stock prices left it unable to raise the capital needed to continue operations.