Notoriety awaits UBS rogue trader
Thursday 15 September 2011
If previous rogue traders are anything to go by, notoriety and possibly even a Hollywood film await the person behind the £1.3 billion UBS fallout.
Nick Leeson hit the headlines in 1995 when he single-handedly destroyed the 233-year-old Barings Bank, which proudly counted the Queen as a client.
A Watford schoolboy-turned-City whizzkid, Leeson's early career was a success, quickly making an impression with Barings and being promoted to the trading floor.
He was appointed manager of a new operation in futures markets on the Singapore Monetary Exchange (SIMEX) and was making millions for Barings by betting on the future direction of the Nikkei Index, his website says.
But things began to unravel when he started making losses and set up a secret account to hide them.
The trader began taking more risks to recoup his losses but problems spiralled out of control and he fled, leaving behind a devastating financial hole and a note on his desk saying: "I'm sorry."
He was eventually arrested in Frankfurt, Germany, where he tried to escape extradition to Singapore.
He failed and was sentenced to six and a half years by a Singapore court.
Leeson eventually wrote a book about his experiences which became a Hollywood film starring Ewan McGregor and Anna Friel.
Last year, Societe Generale trader Jerome Kerviel was convicted of being responsible for losing the bank around 4.9 billion euros (£3.7 billion).
Kerviel also landed a book deal and, in Trapped In A Spiral: Memoirs Of A Trader, said he believed the bank was happy with his work.
At trial, he claimed the bank knew about the risk-taking.
The bank, in turn, said Kerviel, 34, made bets of up to 50 billion euros (£43 billion) - more than SocGen's total market value - on futures contracts on three European equity indices, and that he falsified offsetting transactions to mask the size of his bets.
Kerviel, who was born in Brittany, was sentenced last year to three years in prison although he remains free because he has lodged an appeal. He is reportedly working as an IT technician in the Parisian suburbs.
His moody Gallic good looks and story won sympathy across France, with women wearing T-shirts with the slogan "Jerome Kerviel's girlfriend".
Another, bolstering his cult status, read: "Jerome Kerviel, 4,900,000,000 euros. Respect."
Other episodes included:
:: In 2002 John Rusnak, a currency trader at US bank Allfirst, based in Baltimore, Maryland, and then a subsidy of Allied Irish Bank, pleaded guilty to fraud amounting to $691m (£345m). The following year he was sentenced to seven-and-a-half years in prison after doing a deal with prosecutors;
:: Toshihide Iguchi, a former car dealer, lost more than $1bn (£500m) at Japanese bank Daiwa, in fraudulent trading over 11 years from 1984 onwards. He claimed losses spiralled after he tried to cover up his initial bad bets;
:: In 1991 the Bank of Credit and Commerce International (BCCI) was seized by regulators, after auditors reported huge losses from illegal loans to corporate insiders and trades.
The bank collapsed with debts of more than $16bn (£8bn) and about 250,000 savers lost money.
At its height the bank operated in 78 countries and claimed assets of $25bn (£12.5bn);
:: Yasuo Hamanaka, a trader at Sumitomo Corporation, one of Japan's largest banks, lost the company $2.6bn in unrecorded copper market trades.
Known as "Mr Five Percent" for the share of the global copper market he controlled, he was jailed for eight years for forgery and fraud in 1996.
The company paid about $150m to regulators as a result of the scandal;
:: In one of Britain's biggest banking scandals, 90,000 investors were left out of pocket after Morgan Grenfell fund manager Peter Young, who controlled £1.5bn of funds, broke City rules by investing in high-risk unlisted European securities.
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