Word: traders
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Dates: during 1990-1999
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...applaud you for your insightful report on how trader Nicholas Leeson single-handedly brought down Barings, the venerable London-based investment bank [Cover Story, March 13]. You captured the vapid and temporal nature of expatriate high life in Singapore, of which Leeson was a part. Managers of companies dealing in the most sophisticated and arcane financial instruments have to master Basic Management 101. Unless they rein in their employees, another debacle of Barings' magnitude could occur in the near future. Financial regulators should be even stricter in the wake of the disasters associated with derivatives. However, responsibility for the misguided...
Lawyers for Nicholas Leeson, the trader whose high-flying deals put Barings Bank out of business, insisted that Leeson never intended to run away from the debacle. Indeed, his weeklong dash from Singapore was allegedly nothing more than a long-planned holiday. In Singapore accountants looking into Leeson's transactions reported that two months' worth of records had disappeared. Finally, a Dutch banking and insurance firm, ING Group, completed its takeover of Barings...
...Barings. Just a couple of weeks before the bank's collapse, he boasted to friends that he had been promised a $2 million bonus for the work, in addition to his $350,000 salary, company-financed apartment and limitless travel budget. In Singapore he developed a following. Says one trader: "When all the charts said sell, he would push the market even higher and the locals would go with him." His immediate boss in Singapore was so enamored of Leeson's success that the young man operated virtually without supervision-even though other traders were warning SIMEX authorities that Leeson...
Barings may have wanted to look the other way. They had allowed Leeson to remain chief trader while also being responsible for settling his trades. At most banks the two jobs are split because allowing a trader to settle his own deals makes it simpler for him to hide the risks he is taking-or the money he is losing. As early as March 1992, an internal fax warned that "we are in danger of setting up a structure which will prove disastrous, in which we could succeed in losing either a lot of money, client goodwill or both...
...about the same time, Peter Baring, chairman of the bank, reportedly received a faxed letter from Leeson. According to the Independent, the trader apologized, provided a detailed account of his dealings and said "he doubted the two would ever meet again." When a weekend attempt by the Bank of England to round up a rescuer failed, Baring hinted that a conspiracy had led to the collapse of the institution his family established 232 years ago. But, says Emma Davey, managing editor of Futures and Options World: "Baring didn't have a clue what this is all about. There...