A DERIVATIVES trading scheme launched by Metallgesellschaft's U.S. trading subsidiary, MG Corp., resulted in $1.9 billion in losses for the industrial conglomerate, bringing it to the edge of bankruptcy in early 1994. German banks, including Deutsche Bank, a major investor in Metallgesellschaft, provided a bailout worth more than $2 billion. MG Corp.'s adventures in futures trading started in 1991 when MG Refining and Marketing hired Arthur Benson, who later sued Metallgesellschaft for wrongful termination after he was held responsible for trading losses. He also claimed the company ignored his plan to recoup losses.

The original trading scheme was not illegal and might have succeeded on a smaller scale. MG Corp. sold long-term contracts to provide petroleum products to customers at a fixed rate. These contracts ...

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