Word: leeson
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Dates: during 2000-2009
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Three days was all it took in 1995, after the bank-busting deals of rogue trader Nick Leeson had come to light, for the venerable Barings Bank to file for bankruptcy and forever vanish. Managers at France's Société Générale may well be wondering why their agony endures, a week and counting after a far bigger scandal that cost it $7.13 billion to unwind - and that subjected its risk control procedures to public mockery. Yet the end is still not in sight. The SocGen's board of directors, meeting in emergency session, left...
...rale executives had discovered Kerviel's massive illicit operation, after the trader had gambled positions worth about $73 billion. That's actually more than the bank's entire worth by around $25 billion. Instantly, this evoked comparisons in the media with another lone rogue, Nick Leeson, whose fictitious trades in Singapore lost $1.4 billion for Barings Bank in 1995, wiping out the bank's cash reserves. Leeson was arrested after an international manhunt, and spent more than three years in a Singapore jail. By contrast, Société Générale executives simply suspended Kerviel - perhaps...
...what made a quiet trader - whose Facebook page had just 11 friends - engage in a gargantuan con job and risk years in jail? Those answers might have to wait for Kerviel's trial. Or perhaps for another movie along the lines of the 1999 film Rogue Trader, which portrayed Leeson's extraordinary operation. And should you wish to try and make some money yourself, Leeson has been quoted by one British bookie at odds of 50-1 to play Kerviel...
...huge scale and complexity of Kerviel's fraud has strong echoes of Nick Leeson, a young rogue British trader in Singapore. Leeson bankrupted the 230-year-old Barings Bank in 1995, after losing $1.38 billion in fictitious trades on Asian futures markets, single-handedly wiping out Barings' cash reserves. Leeson was jailed for more than three years in Singapore, and the scandal became almost synonymous with the power of a lone employee to unravel a large company. At the time, officials at various banks said they were tightening internal security measures in order to avert a similar disaster...
Judging by Leeson's experience, Société Générale's rogue trader might some day land another career. Leeson is now manager of the Galway United soccer team in Ireland, and was portrayed by Ewan McGregor in the 1999 movie Rogue Trader, the film version of his autobiography. He has written a further book entitled Back from the Brink: Coping with Stress. That sounds like perfect bedtime reading this week for Société Générale executives...