Salty Gibbon
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Of course he shouldn't still be inside. He didn't kill anybody - just committed a financial crime, for which he was adequately punished.
Bigbusiness
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I think he forged documents to keep his deception going and to me that is malicious intent. If I had just read the book and seen the film, I might have more sympathy for him but I have seen other programmes and I remember him being interviewed shortly after his deception was revealed. He came across as a bit arrogant and showed little remorse. There might have been others involved but it wouldn't have happened without him.
Malicious intent in the sense that he set out to hurt other ppl financially or otherwise?..........it is easy to be judgemental esp if u have not been in that position.............i'm sure trading in the millions of pounds or Dollars is quite different from trading thousands (psychologically). Just like a few ppl r quick to point out that paper trading is not like trading with money 4 real.
Salty Gibbon
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Committed the crime, got punished according to the law, spent time in a Singapore jail.
End of story. It was only money anyway.
End of story. It was only money anyway.
jamieroberts
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does anyone know what a swaption is or where I can buy one?
Also has anyone ever heard of Zenfutuers?
Thanks in advance
Jamie
Also has anyone ever heard of Zenfutuers?
Thanks in advance
Jamie
Ineptitude, greed.. common themes wouldn't you say?
If I had to ask him a question it'd probably not be on a trading issue, I'd rather ask my dog for advice.
Big money always generates big corruption - has done for millenia, will continue to do so. Being one of the little guys of the world I'm more upset when I read some of the absolute rubbish in the UK comics frankly... NORMAL people read that rubbish and go out and buy what the mags recommend. (Floggin's too good fer 'em mutter mutter)
Dave
If I had to ask him a question it'd probably not be on a trading issue, I'd rather ask my dog for advice.
Big money always generates big corruption - has done for millenia, will continue to do so. Being one of the little guys of the world I'm more upset when I read some of the absolute rubbish in the UK comics frankly... NORMAL people read that rubbish and go out and buy what the mags recommend. (Floggin's too good fer 'em mutter mutter)
Dave
jamieroberts,
i believe a swaption is just an option which can be exercised as a swap rather than for cash or physical. so whereas you might take out a swap to hedge some forward position, you could take out a swaption instead if you only wanted the hedge to happen under a certain circumstance (the option).
Not sure how you would go about getting one as an individual.
i believe a swaption is just an option which can be exercised as a swap rather than for cash or physical. so whereas you might take out a swap to hedge some forward position, you could take out a swaption instead if you only wanted the hedge to happen under a certain circumstance (the option).
Not sure how you would go about getting one as an individual.
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I wonder whether leeson is any different to any other enthusiastic trader out there. Ok, so he may have falsified some records but I’ll bet there are city traders getting no more than fired every week for the same reason. Maybe he was just unfortunate that he made some good profits early, his finance management was non-existent, and his trading management were too willing to believe his early success would continue for ever.
Interesting to think that there could be lessons to be learnt from his situation for individual traders – you never hear anybody say that ‘80% of institutional traders go bust’. Is the allegedly poorer success rate of individuals a result of only having their alter-egos to manage them?
In the end simple discipline could be the key: preserve capital, don’t get carried away by some fat profits, set realistic targets, never think of double or quits as an answer, and don’t put your head in the sand when the inevitable bad patches occur.
And if you can’t do that then fire yourself quick before you break your own bank account.
Interesting to think that there could be lessons to be learnt from his situation for individual traders – you never hear anybody say that ‘80% of institutional traders go bust’. Is the allegedly poorer success rate of individuals a result of only having their alter-egos to manage them?
In the end simple discipline could be the key: preserve capital, don’t get carried away by some fat profits, set realistic targets, never think of double or quits as an answer, and don’t put your head in the sand when the inevitable bad patches occur.
And if you can’t do that then fire yourself quick before you break your own bank account.
Salty Gibbon
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Barings really deserved what they got due to total arrogance, ignorance and incompetence. The idiotic and bumbling senior management of Barings should have gone to jail, not poor old
Nick, eh ?
Nick, eh ?
Bigbusiness
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From what I remember, he showed virtually no remorse for his crimes at the time. He didn't turn himself in when his false account was finally discovered, he tried to escape. He convinced his wife that he was innocent and she even got a job as an airline hostess to go and visit him in prison before she realised the extent of his deception. He lied to her all along and I think her side of the story would be quite different to the one portrayed in the book and the film.
Unless he made money somewhere else, his first effort at Barings, according SKJ's link, lost money In 1994 alone, Leeson lost Barings US$296 million; his bosses thought he made them US$46 million, so they proposed paying him a bonus of US$720,000.
He allegedly started his dodgy dealings in 1992 when he arrived in Singapore.
You're right about hidden losses. I've seen this a number of times over the years. It's always the "error" account or the "house" account used to take the losses, and profits diverted to a private account or the house account gets the profits to boost the bonuses. Most companies just tin the offender and cover up.
Funny, I once traded an account no. XX888.
He allegedly started his dodgy dealings in 1992 when he arrived in Singapore.
You're right about hidden losses. I've seen this a number of times over the years. It's always the "error" account or the "house" account used to take the losses, and profits diverted to a private account or the house account gets the profits to boost the bonuses. Most companies just tin the offender and cover up.
Funny, I once traded an account no. XX888.
Salty Gibbon
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Poor old Lisa.
SOCRATES
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I have been watching this thread for a long time, and I have kept quiet. I want everybody who reads this to understand that I am not defending what Nick Leeson did, because what he commited was a crime, and a crime is a crime. A crime, even when defended remains a crime, let us make that clear. He has also been incarcerated for his crime and in addition he is a cancer sufferer so he has had and still has a lot on his plate.
Now let us get down to the nitty gritty. Let us start off with Barings. This was an institution that had been operating for many years. Its error was to enter an arena of finance that its directors and managers did not understand. I stand to be corrected if I am wrong, but did not the Chairman in a speech to shareholders/Bondholders say "It is not very difficult to make money in the Stock Market " ?
Do bear in mind a most important fact, and I will be returning to it later, and it is this : Barings were not engaged EVER in marketmaking in Equities in the Singapore market and to the best of my knowledge in any other market either. This disallowed them from having their finger on the pulse. As we all know the cash market which is the underlying is the font from which all Derivatives emanate. Do you not thinkit imprudent for a house of that pedigree to participate in a market in which it does not occupy a parallelpresence in the parent market ? This is a blunder for which a beginner can be excused to a certain degree, but there is no excuse that can be offered for a house of this experience and pedigree operating in this way. This is the first part.
The second part relates to the inability of the management to realise the consequence of operating in a market which in large measure is dependent on another market in which they have no presence whatsoever and what is worse for ignoring this fact.
The third part relates to the inability of the management to realise that anyone sent into the Lion's Den of an active and liquid market must have proper training, as it is very dangerous and unwise to do otherwise.
The fourth part relates to the nature of the training itself which ought to have been imparted, and was conspicuous by its absence. By this I mean a thorough grounding in how it is that markets really work and not the way not only novices but indeed everyone is led to believe it works according to what the papers say or what was learnt during the course of obtaining a degree or a business qualification, and as this lad had none of this this is already dire.
I remember him being interviewed by a Television Reporter and this lad in his first sentence clearly gave the clue he had no idea how it is that markets work. He said that on that day the prices had remained stable but the volume was astronomic. He decided, because the news was good, to open long positions.and also in consequence of the market having gone up and up. To anyone who has the most basic understanding of the relationship that exists between price and volume would immediately have rung alarm bells so loud as to be deafening. And so the market culminated in what is quite obviously the absolute climax.
To his horror, instead of prices going up, they start to slide. This is enough to baffle anybody who is ignorant of market action and market behaviour. He goes long again, because he reasoned that because there was no bad news this was just a blip. But it was not a blip, was it ? It was the beginning of a Bear Market. Why did nobody tell him. Surely some highly paid "Analist "would have seen fit to fax or telephone from head office. But no, no one did anything because no one knew anything they ought to have known being in the business that they were in. So this lad who finds himself cornered, now tries in his ignorance to sort it out. And again does the wrong thing and a series of wrong things.
The market falls further and suddenly there is an Earthquake in Japan. Do you remember that ?To his astonishment prices go up. He does not understand why because he has not a clue what short covering is . So this time he really thinks it is the bottom and the solution to all his problems. And he goes long again. And the clever professionals who are nett short themselves, use this breather to sell vast quantiies of stock in the cash market to unsuspecting buyers.
And when these buyers are well tanked up with stock, now is the time to drop the market sharply, as this is a classic manoevre to the advantage of professionals and the disadvantage of everybody else. As Barings were not engaged in making prices via marketmaking in the cash market itself, there is no yarstick for anyone at Barings, let alone poor little Nick Leeson, for whom it is not only impossible to have a finger on the pulse of the cash market let alone understand the implications of weakness not resolved within the supply ~demand function which is nowpoised for its last dramatic phase.
As prices had already been falling prior to this respite, it is quite obvious that a Bear Market had developed and not a Bull Market. Now the weakness not being resolved (Because there was no heavy buying to stop the fall) the Earthquake is seen as a golden excuse to justify a sharp fall, The consequence of putting someone in this kind of environment without preparation or training of any sort is an accident waiting to happen. I am not defending Leeson. But in my view in many respects he is worthy of pity and not the contrary.
No Government would dream of sending civilians to fight in a war zone. Soldiers are sent for this purpose. Soldiers are trained to fight. Civilians are not. Nick Leeson was dropped into a War Zone,without any training whatsoever. In my view Barings got everything it deserved for being so complacent.The tragedy is that this lad who is very ill has taken the brunt of everything whereas all the Fatcatshave been either fined or disbarred from practising within the boundaries of the City of London,and he is left to carry the can all his life. and , notwithstanding the previous, and never having met him, is in the end analysis when you are made aware of all these facts he is someone to feel pity for and not otherwise.
That is all.
Now let us get down to the nitty gritty. Let us start off with Barings. This was an institution that had been operating for many years. Its error was to enter an arena of finance that its directors and managers did not understand. I stand to be corrected if I am wrong, but did not the Chairman in a speech to shareholders/Bondholders say "It is not very difficult to make money in the Stock Market " ?
Do bear in mind a most important fact, and I will be returning to it later, and it is this : Barings were not engaged EVER in marketmaking in Equities in the Singapore market and to the best of my knowledge in any other market either. This disallowed them from having their finger on the pulse. As we all know the cash market which is the underlying is the font from which all Derivatives emanate. Do you not thinkit imprudent for a house of that pedigree to participate in a market in which it does not occupy a parallelpresence in the parent market ? This is a blunder for which a beginner can be excused to a certain degree, but there is no excuse that can be offered for a house of this experience and pedigree operating in this way. This is the first part.
The second part relates to the inability of the management to realise the consequence of operating in a market which in large measure is dependent on another market in which they have no presence whatsoever and what is worse for ignoring this fact.
The third part relates to the inability of the management to realise that anyone sent into the Lion's Den of an active and liquid market must have proper training, as it is very dangerous and unwise to do otherwise.
The fourth part relates to the nature of the training itself which ought to have been imparted, and was conspicuous by its absence. By this I mean a thorough grounding in how it is that markets really work and not the way not only novices but indeed everyone is led to believe it works according to what the papers say or what was learnt during the course of obtaining a degree or a business qualification, and as this lad had none of this this is already dire.
I remember him being interviewed by a Television Reporter and this lad in his first sentence clearly gave the clue he had no idea how it is that markets work. He said that on that day the prices had remained stable but the volume was astronomic. He decided, because the news was good, to open long positions.and also in consequence of the market having gone up and up. To anyone who has the most basic understanding of the relationship that exists between price and volume would immediately have rung alarm bells so loud as to be deafening. And so the market culminated in what is quite obviously the absolute climax.
To his horror, instead of prices going up, they start to slide. This is enough to baffle anybody who is ignorant of market action and market behaviour. He goes long again, because he reasoned that because there was no bad news this was just a blip. But it was not a blip, was it ? It was the beginning of a Bear Market. Why did nobody tell him. Surely some highly paid "Analist "would have seen fit to fax or telephone from head office. But no, no one did anything because no one knew anything they ought to have known being in the business that they were in. So this lad who finds himself cornered, now tries in his ignorance to sort it out. And again does the wrong thing and a series of wrong things.
The market falls further and suddenly there is an Earthquake in Japan. Do you remember that ?To his astonishment prices go up. He does not understand why because he has not a clue what short covering is . So this time he really thinks it is the bottom and the solution to all his problems. And he goes long again. And the clever professionals who are nett short themselves, use this breather to sell vast quantiies of stock in the cash market to unsuspecting buyers.
And when these buyers are well tanked up with stock, now is the time to drop the market sharply, as this is a classic manoevre to the advantage of professionals and the disadvantage of everybody else. As Barings were not engaged in making prices via marketmaking in the cash market itself, there is no yarstick for anyone at Barings, let alone poor little Nick Leeson, for whom it is not only impossible to have a finger on the pulse of the cash market let alone understand the implications of weakness not resolved within the supply ~demand function which is nowpoised for its last dramatic phase.
As prices had already been falling prior to this respite, it is quite obvious that a Bear Market had developed and not a Bull Market. Now the weakness not being resolved (Because there was no heavy buying to stop the fall) the Earthquake is seen as a golden excuse to justify a sharp fall, The consequence of putting someone in this kind of environment without preparation or training of any sort is an accident waiting to happen. I am not defending Leeson. But in my view in many respects he is worthy of pity and not the contrary.
No Government would dream of sending civilians to fight in a war zone. Soldiers are sent for this purpose. Soldiers are trained to fight. Civilians are not. Nick Leeson was dropped into a War Zone,without any training whatsoever. In my view Barings got everything it deserved for being so complacent.The tragedy is that this lad who is very ill has taken the brunt of everything whereas all the Fatcatshave been either fined or disbarred from practising within the boundaries of the City of London,and he is left to carry the can all his life. and , notwithstanding the previous, and never having met him, is in the end analysis when you are made aware of all these facts he is someone to feel pity for and not otherwise.
That is all.
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I agree with all your points, however, I don't think Leeson was authorised to take outright positions. I'm not totally sure of this but I believe his remit was to oversee switching between instruments. An error occurred which he tried to trade out of.
Over the years I've seen a few "traders" get into deep trouble from trying to trade out of errors. This was his first mistake, caused, as you say, by inexperience. Always declare your errors and start afresh. The market looks different with a clean mind.
The main mistake of course, that had already been made, is that Barings weren't monitoring their operation, and didn't see the cover up.
Over the years I've seen a few "traders" get into deep trouble from trying to trade out of errors. This was his first mistake, caused, as you say, by inexperience. Always declare your errors and start afresh. The market looks different with a clean mind.
The main mistake of course, that had already been made, is that Barings weren't monitoring their operation, and didn't see the cover up.