Rogue Trader: Nick Leeson Part Two?
In the news the last couple of days have been reports about the alleged fraud committed by a "rogue trader" at the French investment firm Societe Generale (www.socgen.com) .
http://edition.cnn.com/2008/BUSINESS/01/24/societegenerale.fraud/index.html
What is really alarming about the whole issue is that a single trader was responsible for a whopping $7.2 billion fraud. Basically he took positions much above his authorised powers. While, the bank might cite him creating fictitious firms and blah blah.. the pressing question to ask is how and why did such large positions get built without getting detected by anyone?
This also reminds us of the other infamous rogue Trader nickleeson (www.nickleeson.com) whose aggressive bets on the Nikkei futures on the now defunct Singapore International Monetary Exchange (SIMEX) and the infamous 88888 account led to $1.4 billion loss for Barings bank which also led to the collapse of Barings.
“How Leeson Broke the Bank.” BBC Online. June 22, 1999. British Broadcasting Company. 12 March 2005. http://news.bbc.co.uk/2/hi/business/375259.stm
Later Nick also authored a book titled Rogue Trader which was later turned into a film. http://www.nickleeson.com/books/rogue_trader_book.html
Nick Leeson spent 6.5 years in prison, battled cancer and divorce and is now back into the mainstream. We have to wait and watch what happens to the Socgen trader.
The financial markets are already battling the subprime crisis, and if we have more skeletons out of their closets, investor confidence (which is already thrashed thanks to the stock market roller coasters) will plummet into an abyss.
Trading in SocGen's shares was suspended following the announcement.
This also raises the questions of ethics and its importance in business. And this is a question that we as MBAs and future business leaders or (Rogue!) traders need to ask ourselves.
Incidentally if we look at B-schools with the lens of Ethics, social responsibilty the FT rankings tend to get turned on their head. Beyondgreypinstripes is a site that looks into these issues and has its own ranking
have a look http://www.beyondgreypinstripes.org/rankings/index.cfm
Stuart
http://edition.cnn.com/2008/BUSINESS/01/24/societegenerale.fraud/index.html
What is really alarming about the whole issue is that a single trader was responsible for a whopping $7.2 billion fraud. Basically he took positions much above his authorised powers. While, the bank might cite him creating fictitious firms and blah blah.. the pressing question to ask is how and why did such large positions get built without getting detected by anyone?
This also reminds us of the other infamous rogue Trader nickleeson (www.nickleeson.com) whose aggressive bets on the Nikkei futures on the now defunct Singapore International Monetary Exchange (SIMEX) and the infamous 88888 account led to $1.4 billion loss for Barings bank which also led to the collapse of Barings.
“How Leeson Broke the Bank.” BBC Online. June 22, 1999. British Broadcasting Company. 12 March 2005. http://news.bbc.co.uk/2/hi/business/375259.stm
Later Nick also authored a book titled Rogue Trader which was later turned into a film. http://www.nickleeson.com/books/rogue_trader_book.html
Nick Leeson spent 6.5 years in prison, battled cancer and divorce and is now back into the mainstream. We have to wait and watch what happens to the Socgen trader.
The financial markets are already battling the subprime crisis, and if we have more skeletons out of their closets, investor confidence (which is already thrashed thanks to the stock market roller coasters) will plummet into an abyss.
Trading in SocGen's shares was suspended following the announcement.
This also raises the questions of ethics and its importance in business. And this is a question that we as MBAs and future business leaders or (Rogue!) traders need to ask ourselves.
Incidentally if we look at B-schools with the lens of Ethics, social responsibilty the FT rankings tend to get turned on their head. Beyondgreypinstripes is a site that looks into these issues and has its own ranking
have a look http://www.beyondgreypinstripes.org/rankings/index.cfm
Stuart
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