Top five op risk loss events in May 2009

1. Loss amount: $146 million

Firm: Bank SinoPac

BIS event type: Theft and fraud

BIS business line: Retail banking

Bank SinoPac agreed to buy back an estimated $146 million in fraudulent securities supplied by Danny Pang in a pyramid scheme. Beginning in at least 2003, Pang and his California-based company PEMGroup sold at least $740 million in fake property and insurance notes to investors in Hong Kong and Taiwan through Bank SinoPac and six other banks. Taiwan's financial regulator asked that the banks take action to protect investors, leading to buyback offers by the banks.

2. Loss amount: $87.06 million

Firm: Jensen & Moeller Invest

BIS event type: Theft and fraud

BIS business line: Corporate finance

Danish investment company Jensen & Moeller Invest (JMI Invest) lost an estimated $87.06 million through its 50% ownership of IT Factory, a Danish software company. IT Factory was established in 2001 and went bankrupt in 2008. Chief executive Stein Bagger had falsified 90% of the company's revenue, leaving JMI Invest with $87.06 million in debt and no available cash. JMI Invest was undergoing reorganisation and selling off its other portfolio holdings.

3. Loss amount: $60 million

Firm: Goldman Sachs

BIS event type: Suitability, disclosure and fiduciary

BIS business line: Trading and sales

Goldman Sachs settled an investigation by Massachusetts attorney-general Martha Coakley for $60 million. The state was investigating investment banks' securitisation of subprime loans in relation to the US housing market collapse. Goldman Sachs agreed to pay $10 million to the state and $50 million towards a mortgage modification programme for individuals who obtained loans from Goldman Sachs subsidiaries.

4. Loss amount: $45 million

Firm: Mercer

BIS event type: Suitability, disclosure and fiduciary

BIS business line: Insurance (non-BIS)

The Marsh & McLennan unit reached a $45 million settlement with a Wisconsin county over alleged consulting failures. In 2000, the county chose a deferred-retirement option plan for its employee pension plan. The county's plan was unique in that it allowed employees to earn unlimited interest on their total accumulated pension payments in exchange for working past their retirement dates. Actuaries at Mercer failed to inform the county of the plan's potentially massive costs.

5. Loss amount: $38.25 million

Firm: State Compensation Insurance Fund of California

BIS event type: Theft and fraud

BIS business line: Insurance (non-BIS)

State Compensation Insurance Fund of California lost $38.25 million due to premium insurance fraud committed by building contractor Michael Petronella. From 2000 to 2008, Petronella under-reported his company's number of employees and under-reported his total payroll expenses by approximately $29 million to avoid paying workers' compensation premiums. He also filed more than 40 claims for workers who were in reality employed by other companies.

Source: SAS Software

Criteria: Financial institution operational risk events that closed or settled during May 2009. Market, credit, strategic and non-financial institution events have been excluded from this list.