- Rogue trader Alex Stenfors lost $US456 million at Merrill Lynch at the height of the financial crisis.
- “I had problems with my ribs, I had stomach pain, my sleeping pattern was horrible, and mentally I was exhausted,” Stenfors says of his physical state.
- “I wish I could say that I was so unhappy for 15 years, and now I’ve found nirvana. That’s not the case. I loved being a trader.”
LONDON — It was 2009, and Alexis Stenfors was holidaying in India with his wife when he decided to make the confessional phone call that would spark a year-long investigation, end his high-flying career in the City, and destroy his reputation.
Stenfors had grown up in Finland as part of its Swedish-speaking minority, before moving to London and landing a job at Merrill Lynch, where he headed Scandinavian swaps trading.
When global markets had crashed in 2008, rippling out from a crisis in the US mortgage market, many believed that they had bottomed out. But Stenfors believed the global financial system was still to experience its biggest shock.
Under intense pressure to produce big margins in turbulent conditions, he decided to bet on the implosion of the financial system. He took out increasingly risky and extreme currency positions, but they failed to come off and losses began to mount.
That is when he took desperate action, deliberately entering false prices for his positions amounting to around $US100 million (£64 million).
The period of trading lasted only a few weeks, but it was ultimately found to have cost Merrill Lynch $US456 million.
He was fired shortly after he returned from his holiday, having explained to his manager what he had done on the call.
His reputation was torn to pieces by the press, and he was banned from trading for five years.
Eight years on, and now working as an academic, Stenfors has written Barometer of Fear, a tell-all book which he says began as an attempt to counter-balance the way he had been portrayed in the media.
“When the media storm hit in 2009, search results for my name on Google changed from stories about me winning a cross-country running championship as a teenager to over 100,000 hits about me being a rogue trader. It changed everything,” he tells Business Insider over a coffee in London.
“I will always be known as a rogue trader”
The book may have started as an attempt to reclaim his reputation, but Stenfors is gradually learning to accept that he will always be labelled a rogue trader.
“I do miss it because I was always interested in economics and finance, and being a trader is really being at the epicentre of where it all happens.
“I know that people will always ask me questions about it. Students, colleagues, you — I always get these questions. That hasn’t changed at all. It’s the same as it used to be.
“It’s just that people know more now. People have read more. They have more about my side of the account. More and more, I’m learning to live with the fact that, unfortunately, I will always be known for that.
It could all have been very different. In 2008, shortly after the collapse of Lehman Brothers, Stenfors resolved to quit the City, telling his wife that he would quit the pursue a PhD instead.
“I was in very bad physical shape in 2008,” he says. “I had RSI [repetitive strain injury, a painful muscular disorder] and it didn’t go away, I had problems with my ribs, I had stomach pain, my sleeping pattern was horrible, and mentally I was exhausted.”
“I felt the markets had changed somehow from what they used to be”
A feeling of ill-defined dread stretched to the markets in which he traded, too. “I had a suspicion about Libor manipulation, and FX manipulation as well. I felt the markets had changed somehow from what they used to be,” he says.
A “strange kind of loyalty” kept him at Merrill Lynch, though, and it would be less than twelve months before the events unfolded which came to define his career.
Stenfors can explain how he ran up such huge losses in a matter of weeks, but the question of why he cooked his books instead of notifying his managers is more difficult for Stenfors to answer.
The second chapter of Barometer of Fear is titled “Why did I do it?”
Unlike the chapters devoted to Libor manipulation — a topic on which Stenfors is an academic authority — it is pointedly short, and reads as a kind of shrug. After eight years, a book, a PhD, and a long stretch of psychotherapy, Stenfors does not know why he did it.
He says he was under a lot of pressure from his managers to make big margins. “I was pressured to perform, a lot. There’s no doubt about that. I was pressured to, encouraged to,” he says.
“I could write a lot more about Merrill Lynch, but I don’t want to”
So does he blame Merrill Lynch? “I could write a lot more about Merrill Lynch, but I don’t want to,” he says.
Ultimately, though, he says “the responsibility was always mine.”
“No matter how hard you are pushed, it doesn’t justify the mistakes that I made. The right thing to do here is to rebel against the bank and say, no, I don’t want to do this. I don’t want to be part of this.
“The common answer when I talk to others who have been involved in banking scandals is: ‘Yeah, but my bank told me to do it,’ or: ‘My boss told me to do it,’ or: “My boss thought it was OK.'”
“You have to draw that line somewhere and say well, according to me, this is wrong. This is the moral thing to do. That is very tricky to do. I wish I had an answer. I wish it was possible to say: ‘This is when you should follow your rules and this is when you should go against the bank,’ but it’s not.”
“I loved being a trader”
Stenfors is an academic now, with a PhD and a lecturing post at Portsmouth University. Is he happy? “Yes, I’m happy now. But I was also happy as a trader. That’s the tricky thing. I wish I could say that I was so unhappy for 15 years, and now I’ve found nirvana. That’s not the case. I loved being a trader.”
He will not even rule out a return to trading, now that the five-year ban handed to him by the FSA in 2010 is lifted, although he says it is unlikely.
“I do miss it,” he says. “Because I was always interested in economics and finance, and being a trader is really being at the epicentre of where it all happens.
“That feeling of being in trading floor or in a dealing room when it’s really happening — that is very difficult to take away. That is a fantastic experience that I do miss. I don’t miss the rest.”
“I told my wife that I would never ever work in banking again, but I really don’t know”
Ultimately, what is likely to keep him away from the trading floor is his inability to answer a question the FSA asked him shortly before his ban was lifted.
“The FSA asked me in an interview: ‘How can we make sure that you will never do this again?'”
“I thought about it a lot — it was such a good question. I’ve thought about it ever since.”
“How can I make sure that it will never happen? Well, the easiest option is never, ever to contemplate going into banking again. That’s it. That’s the answer. But who knows?”
“I told my wife that I would never ever work in banking again. I told her immediately after it happened that I would never work in banking again — ever, ever, ever, ever. And I still keep on saying that to myself. But I really don’t know.”
“Because if I go into trading, if I go into banking, I don’t know what will happen.”
“I’m not saying I would become a rogue trader — absolutely not. But I also know that I would change from who I am today. I know that.”