Jerome Kerviel, this guy Jonathan Bunn might have just stripped you of your “rogue trader” status.
Bunn worked for Lewis Charles Securities, where he wasn’t allowed to prop trade.
He did anyway (according to the Guardian). He even admits it; he’s pleading guilty to four counts of false accounting.
Basically, Bunn shorted 7 million HSBC shares last summer (wrongly) using LCS money. To do it, the Guardian says he had to repeatedly lie to LCS back office employees.
From the Guardian:
Bunn wrote four deal-slips, which purported to record purchases of shares and submitted them to the back-office at Lewis Charles giving the illusion that the share sales had been “matched” with buyers, and that the stockbroker did not have an exposure to price movements.
The back-office guys must have been suspicious because they asked Bunn to verify that there was a client on the other side of the trade. And Bunn was just like, look, I insist they’re real, and it worked. The back office traders let the trades go through.
His first short trade was on 22 July, then he upped it over the next six days to cover 6,950,000 HSBC shares. Then… he stopped showing up for work. (It get’s better.)
According to the Times, LCS staff started sending a bunch of frantic emails asking him to provide details of his trades. When he didn’t respond, the head of the interdealer broking desk showed up at his house and demanded an explanation.
It sounds like he wasn’t there to answer the door because it wasn’t until he sent his managers a text that said, “I’m sorry and I realise how serious this is,” that he admitted guilt.
Bunn’s job (inter-dealer broker) only allowed him to trade by matching buyers and sellers of securities. Apparently he thought he could make the bank a ton of money and become an instant star.
Except that as soon as he shorted HSBC (on July 22) the stock literally shot up. Look at the chart. It’s almost like Bunn wanted LCS to lose money. (They didn’t, they had insurance.)
Then Lewis Charles discovered the rogue position in its name and closed the trade on July 31 2009. They would have lost £2.7 million if they hadn’t had insurance, according to the Guardian.
He’s the most awesome, worst rogue trader ever.
Soon we’ll have to add this guy to our list of the worst trades of all time.