Rogue trader

A rogue trader is an authorized employee making unauthorized trades on behalf of their employer. It is most often applicable to financial trading, where professional traders make unapproved financial transactions.[1]

This activity is in the grey area between civil and criminal illegality for the reason that the perpetrator is a legitimate employee of a company or institution, yet enters into transactions on behalf of their employer without permission.

One famous rogue trader is Nick Leeson, whose losses were sufficient to bankrupt Barings Bank in 1995 following his ill-advised and unauthorized investments in index futures. Through a combination of poor judgement on his part, lack of oversight by management, a naïve regulatory environment, and unfortunate outside events like the Kobe earthquake, Leeson incurred a $1.3 billion loss that bankrupted the centuries-old financial institution.

Table of largest rogue trader lossesEdit

Name Country Date(s) Loss Institution Market activity Sentence
Jérôme Kerviel [2] Paris, France 2006–2008 $6.9 billion (€4.9 billion) Société Générale European Stock Index Futures 5 years prison of which 2 years are suspended, pending appeal
Yasuo Hamanaka [2] Tokyo, Japan 1996 $2.6 billion Sumitomo Corporation Copper 8 years prison
Kweku Adoboli [3] London, United Kingdom[4] 2011 $2.3 billion UBS S&P 500, DAX, and EuroStoxx Futures 7 years in prison
Nick Leeson [2] United Kingdom 1995 $1.3 billion (£827 million) Barings Bank Nikkei Index Futures 6.5 years prison
Toshihide Iguchi [2] Osaka, Japan / New York City, United States 1995 $1.1 billion Resona Holdings U.S. Treasury Bonds 4 years prison
Boris Picano-Nacci [5] Paris, France 2008 $980.3 million (€751 million) Groupe Caisse d'Epargne Equity Derivatives €315 million fine (2 year suspended sentence)
John Rusnak [2] Maryland, United States 2002 $691 million Allied Irish Banks Foreign Exchange Options 7.5 years prison
Chen Jiulin Singapore 2005 $550 million China Aviation Oil Jet Fuel Futures 4 years and 3 months prison
David Bullen
Luke Duffy
Vince Ficarra
Gianni Gray
Melbourne, Australia 2003–2004 $187 million (A$360 million) National Australia Bank Foreign Exchange Options 3 years and 8 months prison
2 years and 5 months prison
2 years and 4 months prison
16 months prison
Matthew Taylor[6] United States 2007 $118 million Goldman Sachs S&P 500 e-mini Futures Pending Trial

ReferencesEdit

  1. ^ MOLLENKAMP, CARRICK (September 16, 2011). "UBS: Rogue Trader Hit Firm". Wall Street Journal. Retrieved 2011-09-16. 
  2. ^ a b c d e Slater, Steve (September 15, 2011). "Factbox - UBS trader joins rogues' gallery of financial crime". Reuters. Retrieved 2011-09-15. 
  3. ^ "The curse of delta one strikes UBS". Financial Times. September 15, 2011. Retrieved 2011-09-15. 
  4. ^ http://www.nbcnews.com/business/former-ubs-trader-adoboli-sentenced-seven-years-fraud-1C7172741
  5. ^ "French rogue trader handed €315 million fine". The Local. January 28, 2013. Retrieved 2013-08-27. 
  6. ^ "Rogue trader should pay $118 million to Goldman Sachs: US". CNBC. December 3, 2013. Retrieved 2013-12-03. 

See alsoEdit

Last modified on 26 March 2014, at 02:59