The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Lessons still not learnt, warns Nick Leeson

In every industry, the vast majority of frauds are committed by the defrauded company’s own staff. But nearly 10 years after the collapse of Baring Brothers, banks have been slow to understand how to manage employee risk.

frontend-03.gif

That was the message from the world’s best-known rogue trader, Nick Leeson, at a seminar organized by advisers Square Mile Compliance and Risk Audit in London last month. Leeson compared his own story with more recent scandals such as those of Allied Irish Bank’s rogue trader John Rusnak, or the four currency traders suspended by National Australia Bank earlier this year.

Has big business put checks in place to catch rogue employees before they do significant damage? Leeson suggests not.

“The similarities between Barings, AIB, and NAB are quite frightening,” said Leeson. “The only difference is that these banks had sufficient capital to withstand losses.” Rusnak, as Leeson did, was selling deep in-the-money options to hide losses. NAB’s rogue traders were simply inputting fictional prices.

“This is not rocket science,” said Leeson. “The instruments might be complex. The frauds are anything but.”

Still, it’s good to know that the authorities are taking employee risk seriously. Leeson’s audience included eight members of the Metropolitan Police as well as representatives from the Bank of England and UK regulator the Financial Services Authority. 

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree