Rogue Trader's Advice For Rogue Banks

You know what? After the collapse of Bear Stearns, Lehman Brothers and Merrill Lynch, it’s hard to hate so hard on Nick Leeson. The “rogue trader” who brought down Barings Bank thirteen years ago was just too early. A decade later reckless trading would become all the rage, with the very same effects.

Now he thinks banks may, at long last, be ready to learn the Lesson of Leeson, which apparently involves putting our robot masters in charge because humans are too stupid and irresponsible to be trusted with a financial system.

From Computer World:

Nick Leeson caused the collapse of Barings bank in 1995. Speaking today at the Burton Group Catalyst conference in Prague, he said: “I was losing £20m for every point the Nikkei lost, resulting in £11m per day for the first 58 days of trading in 1995. There should have been an interface between IT and business to highlight anomalies.”

Trading data was sent from Leeson’s office in Singapore to Barings’ London headquarters. But the IT professional receiving this data did not understand what it was and deleted it. “I manipulated all the data. It’s important to have a co-ordinated approach. There was no control, human or technology-based to highlight the discrepancies.”

Leeson added: “It’s frightening that, 13 years on, the same errors are occuring. The last 12-18 months has shown risk management is an oxymoron – definitely risk, but no management. People are paying lip service to risk management.”


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