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 losses [edit]
| Name | Country | Date(s) | Loss | Institution | Market activity | Sentence |
|---|---|---|---|---|---|---|
| Nick Leeson [2] | United Kingdom | 1995 | £827 million leading to bank failure | Barings Bank | Nikkei index futures | 6.5 years prison |
| Toshihide Iguchi [2] | Osaka, Japan / New York, United States | 1995 | $1.1 billion | Resona Holdings | U.S. Treasury bonds | 4 years prison |
| Yasuo Hamanaka [2] | Tokyo, Japan | 1996 | $2.6 billion | Sumitomo Corporation | copper | 8 years prison |
| John Rusnak [2] | Maryland, United States | 2002 | $691 million | Allied Irish Banks | foreign exchange options | 7.5 years prison |
| Gianni Gray, David Bullen,
Vince Ficarra, Luke Duffy |
Melbourne, Australia | 2003 Oct - 2004 Jan | A$360 million | National Australia Bank | foreign exchange options | 16 months prison, 3 years and 8 months prison,
2 years and 4 months prison, 2 years 5 months prison |
| Chen Jiulin | Singapore | 2005 | $550 million | China Aviation Oil | jet fuel futures | 4 years and 3 months prison |
| Jérôme Kerviel [2] | Paris, France | 2006–2008 | €4.9 billion | Société Générale | European stock index futures | 5 years prison of which 2 years are suspended - pending appeal |
| Boris Picano-Nacci | Paris, France | 2008 Oct | €751 million | Groupe Caisse d'Epargne | Equity Derivatives | investigation in progress |
| Kweku Adoboli [3] | London, United Kingdom[4] | 2011 | $2.3 billion | UBS | S&P 500, DAX, and EuroStoxx index futures | 7 years in prison |
References [edit]
- ^ MOLLENKAMP, CARRICK (September 16, 2011). "UBS: Rogue Trader Hit Firm". Wall Street Journal. Retrieved 2011-09-16.
- ^ a b c d e Slater, Steve (September 15, 2011). "Factbox - UBS trader joins rogues' gallery of financial crime". Reuters. Retrieved 2011-09-15.
- ^ "The curse of delta one strikes UBS". Financial Times. September 15, 2011. Retrieved 2011-09-15.
- ^ http://www.nbcnews.com/business/former-ubs-trader-adoboli-sentenced-seven-years-fraud-1C7172741
