Nick Leeson, the original rogue trader, can’t resist the pull of the markets and is still placing financial bets 20 years after he first became infamous.
“Trading is one of those things you never totally divorce yourself from, no matter how bad the experience may be in the past,” Leeson, who brought down Barings Bank in 1995 with unauthorised trades, told Business Insider.
Leeson has signed up with CoalFace Capital, a firm that ranks day traders with the aim of tracking the top performers with an investment fund.
He won’t say where he comes in the league table but says his name should inspire others to use caution when trading their own cash.
“The message that my name brings is caution. You do need to understand what you’re doing, otherwise a lot of people blow up, and blow up very quickly,” said Leeson, who introduced the world to the phrase “rogue trader” after racking up £827 million ($1.5 billion) in losses.
While that was enough to bring down Barings Bank, the UK’s oldest merchant bank before its collapse, it pales against the billions lost by the rogue traders that came after.
In 2008, Jerome Kerviel lost €4.9 billion (£3.7 billion) at Societe Generale, and, in 2011, Kweku Adoboli’s trades left UBS on the hook for $2 billion (£1.4 billion).
According to Leeson, there’s one thing they have to do to be able to carry on with their lives: take ultimate responsibility for their actions.
“You have to accept what you’ve done and gone through and be accountable for it,” he said.
“I’m not sure Kweku and Kerviel are there yet. It looks like Kerviel still blames the bank and you have to get that accountability to be able to move forward.”
“You need that accountability for your actions and I don’t see that evidence yet,” said Leeson.
It took Leeson a spell in a Singapore jail and colon cancer to realise the power of accountability. As the losses spiralled in February 1995, he fled Singapore with his then-wife Lisa and sparked an international manhunt that ended when he handed himself in days later, in Germany.
CoalFace, based in University College Dublin’s tech and innovation wing, is hoping to do to the fund management industry what Uber did to taxis.
CEO and founder Declan McEvoy said: “In the world we live in now, with the amount of data we have, and with all the different gig-economy things going on like Uber for taxi drivers, we could do something similar for traders, connecting traders and investors using technology.”
CoalFace uses data from FXCM, FXPro, ADS Securities, Saxo and CMC on amateur traders to create a league table. Analysing the data, CoalFace can pick out common errors traders make and send them tips on how to avoid them.
Once enough people have signed up, CoalFace will track the best performers in a managed fund. The firm will pay the top 300-400 performers up to €136,000 a year for the privilege. Just making it into the top half of the table will net traders around €2,000.
“The project is in two phases. The first phase is Kevin Costner in ‘Field of Dreams’ – build it and they will come. So we’re getting Nick’s help to get as many people to sign up as possible. There’s zero downside for the traders,” McEvoy, a former trader at Citi and UBS, said.
“Phase two, is, when we get to 5,000-10,000 traders in the system, look at the top 300-400 and see if we can track them. And when we track them, we’ll obviously do quite a bit of testing, and that’s where our expertise comes in,” he said.
Using the data to spot avoidable mistakes is key. For Leeson, education is power.
Leeson said: “The two big events in my life have been the collapse of the bank and having to battle cancer. And with both of them, you improve your chances if you educate yourself, if you understand what’s going on, empower yourself and take control.”