TRX Futures hit by rogue trader
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TRX Futures hit by rogue trader

UK newspaper reveals that a project and risk manager from brokerage and trading company TRX Futures has been jailed for five years

It looks like a rogue trader has struck again and this time at London-based trading and brokerage firm TRX Futures.

According to the UK's Daily Mail (strangely, the only one to report this at the time of web publication), 31-year-old Shaun Oates lost the group £4.8 million over a number of fraudulent and unauthorised trading transactions and has been jailed for five years.

According to the Daily Mail report:

Shaun Oates, 31, of New Addington, Surrey, left TRX Futures with the massive black hole in its accounts after blowing the cash on speculative deals in the futures, options and foreign exchange markets.

The firm had to cut salaries and lay off two employees in an attempt to balance its books, while Oates pocketed £775,000 for himself.
Oates broke company rules by setting up a trading account for his own front company, Cynthen Capital, and then faking records to show it had deposited $5 million, the Old Bailey heard.

Oates also deleted successful trades from real clients' records, before diverting the profits and buying two houses with £775,000 of ill-gotten gains. 

As the firm's project and risk manager, his job was to minimise the company's exposure to financial uncertainty.

Despite the overwhelming evidence against him, Oates continued to deny any wrongdoing in meetings with company managers and refused to answer any questions in a police interview after his arrest.

After the fraud was uncovered, the firm lost £4.86 million, some 30% of its capital.

Peter Hunter, defending, said the con failed after the markets 'became turbulent' in late 2008.

Well, speaking of rogue trading scandals, take a look at Euromoney's coverage at the most infamous alleged rogue trading and risk management scandals of the year:

Regulator homes in on individual risk managers and compliance officers

Experts say the FSA is now targeting individual risk and compliance managers and making them personally accountable for investment losses when failing to gauge or manage the risk firms take on

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Alleged UBS rogue trader exploited ETF settlement loophole

New disclosures on UBS’s $2.3 billion loss adds to doubts about the quality of Swiss bank’s risk management controls and practices

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Exclusive: Alleged UBS rogue trader could use bank's risk management record as defence

Kweku Adoboli could use “lack of a sufficient risk management structure” as part of his defence, says a source close to UBS

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Exclusive: UBS’s operational risk management unit used rogue trader loss events data

Euromoney exclusively reveals that UBS’s operational risk management unit uses a database of case studies of major loss events, including other rogue trader scandals in history

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Reading between the lines on what UBS' announcement means for its investment bank

A "less capital intensive bank" will have people working in much of UBS's FICC business looking for an exit.

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Editor's letter: UBS loss only raises more questions

Disclosures from UBS about the details of the alleged fraudulent trading that has cost the bank $2.3 billion raise more questions than they answer about the extraordinary results.

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Abigail with attitude: Chaos in the ranks at UBS

Grübel should have stayed to steady the ship; Ermotti becomes fourth CEO in four years, but what are his credentials for the role?; and a lame duck chairman cannot be the right person to force through the changes that UBS urgently needs to make

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Risk managers lack tools to monitor rogue trading

UBS rogue trading scandal most likely occurred due to the lack of risk management tools needed to monitor trades between bank silos, says operational risk expert.

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Rogue trader scandals: roll-call of shame

With the arrest of UBS’s Kweku Adoboli on a charge involving $2 billion of losses accumulated from unauthorized trades, Euromoney takes a quick look at some of the largest rogue trader scandals to hit the headlines.

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Banks have not learnt lessons on risk management

It is clear that the banks that paid huge sums to financial engineers to fill their balance sheets full of toxic waste stopped digging their way into that hole rather quickly after the shock of 2007 and 2008 and have spent the time since trying to dispose of assets and garner the financial wherewithal to write down or at least reserve against those they can’t sell.

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- Euromoney Skew Blog

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