Nick Leeson caused the collapse of one of Englands’ oldest banks, Barings Bank, by gambling on the Japanese stock market with the bank’s money. His last bet needed the Nikkei to remain stable. However, the same night he placed the bet, an earthquake occurred, sending Japan’s stock market plummeting.
by cock_bite
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More information: https://en.wikipedia.org/wiki/Nick_Leeson
> The beginning of the end occurred on 16 January 1995, when Leeson placed a short straddle in the Singapore and Tokyo stock exchanges, essentially betting that the Japanese stock market would not move significantly overnight. The Great Hanshin earthquake hit early in the morning on 17 January, sending Asian markets, and Leeson’s trading positions, downward. Leeson attempted to recoup his losses by making a series of increasingly risky new trades (using a long-long future arbitrage), this time betting that the Nikkei Stock Average would make a rapid recovery. The recovery failed to materialise.
> Leeson left a note reading, “I’m sorry” and fled Singapore on 23 February. Losses eventually reached £827 million (US$1.4 billion), twice Barings’ available trading capital. After a failed bailout attempt, Barings, which had been the UK’s oldest merchant bank, was declared insolvent on 26 February.
When I was a considerably younger IT-support bloke I once went for a job interview at Barings in London.
Find the building (get there early). Sit in the shade until it the appointed hour. Needed to cool off anyway (hot).
Through the doors… into an infinitely long marble-floored corridor with very very old oil paintings lining the walls. In the distance about 4 kilometres away is the receptionists desk, and about 4 seconds into the journey my shoes start squeaking… like “Squee sqaw squee sqaw”. I think it was the marble floors. The sound of my squeaking shoes was literally the only thing going on in the whole corridor/reception area.
Didn’t get the job. 300+ year old oil paintings everywhere. Normally corporations fill the lobby with impressive art (that they rent)… Barings had their own and it filled the entire fucking building. Got sold to IMG for 1 quid. Bargain. I hope the receptionist (who was kind enough not to mention the squeaking shoe drama) managed to steal something nice.
He looks happy they found him.
I had a smug comment about the collapse of a merchant bank, but then I realized that people were employed by that bank. Does anyone know how I should feel?
I hope he learned the Leesson!
So, it was all one rogue trader’s greed, stupidity and bad luck and nothing to do with structural risk management, leverage and abusive short selling?
Press X to doubt.
I always wonder what would have happened if his bet paid off…… no doubt he’d be on the board. Never mind the structural risk problems, move on, nothing to see here.
Bank employee was betting, I.e the bank. Fraud and lack of control measures and detection is also the banks problem and hence they paid the price.
Looks like an American Outlaw.
His book “Rogue Trader” is worth reading. Although its obviously a bit self-serving, its still a gripping read – hard to believe its recounting real events, and is not a cheesy fictional thriller. His initial scheme goes wrong, and the cover-ups, deceptions and lies quickly compound themselves as he tries to keep all the plates spinning. His stress levels must have been unbelievable. Its an extraordinary story.
Nick was hung out to dry by the higher ups in the bank who not only knew what was going on but actively promoted those practices.
I’d blame the bank’s lack of controls more so than this gambler screwing upÂ
Ewen McGregor in Rogue Trader