Nomura Blames $40 Million Invexstar Loss on Incompetent Trader

Giovanni Lombardo is suing Nomura in London for unfair dismissal as bank says Lombardos inaction on client caused big loss.

A Nomura Holdings Inc. trader who failed to tell his bosses about the deteriorating performance of a client that helped cause the banks biggest-ever trading loss was “at best incompetent or at worst deceitful, a senior manager said during the first day of a London employment lawsuit.

Giovanni Lombardo, who is suing the bank for unfair dismissal, “did nothing” to prevent losses resulting from the 2015 demise of his client Invexstar Capital Management Ltd., Mike Ward, Nomuras head of equity sales, said in a statement submitted to the court Friday. Lombardo, who will probably give evidence next week, will claim it was not his responsibility to monitor his clients trades, according to Wards statement.

Lombardo “did not, as he should have done, spot significant concerns from Invexstars trading activities,” Ward said. “I find it utterly unacceptable that the claimant thinks he didnt have any obligation to monitor clients behavior as this is a central part of his day-to-day obligations in his role.”

The case is part of the fallout from the demise of Invexstar, an obscure bond-trading firm that inflictedlossesof about 120 million pounds ($173 million) on some of the worlds biggest banks when it failed in 2015 after about a years trading. The collapse — and thetrack recordof the companys manager and sole employee, Alberto Statti — raised questions over how lenders manage their risks.

Nomura terminated all Invexstar outstanding failed trades on May 13 last year. They had a value of about $666 million, according to Ward. That translated to losses of more than $40 million for the bank, the most significant from any single client in the banks history, he said.