English former derivatives trader (born 1967)
This article is about the derivatives broker. For the racing driver, see
Nick Leason
.
Nick Leeson
|
---|
Born
| Nicholas William Leeson
(
1967-02-25
)
25 February 1967
(age 57)
|
---|
Education
| Parmiter's School
|
---|
Occupations
| - CEO of Irish football club
Galway United
(former)
- Derivatives
broker (former)
- Head Educator at Bizintra (former)
- CEO of Bull and Bear Capital (current)
|
---|
Spouses
| -
Lisa Sims
(
m.
1992;
div.
1997)
[1]
-
Leona Tormay
(
m.
2003)
|
---|
Website
| nickleeson
.com
|
---|
Nicholas William Leeson
[2]
(born 25 February 1967) is an English former
derivatives
trader
whose fraudulent, unauthorised and
speculative
trades resulted in the 1995 collapse of
Barings Bank
, the United Kingdom's second oldest
merchant bank
. Leeson was convicted of
financial crime
in a
Singapore
court and served over four years in
Changi Prison
.
Between 2005 and 2011, Leeson had senior management roles at
League of Ireland
club
Galway United
. After it suffered financial difficulties, he resigned from his position as chief executive officer. He is also active on the keynote and after-dinner speaking circuit, where he advises companies about risk and
corporate responsibility
. Leeson is currently a corporate firm private investigator in charge of dealing with cases of financial misconduct. He resides in
Galway
as of 2023.
[3]
Early life
[
edit
]
Nick Leeson was born in
Watford
,
Hertfordshire
, to working-class parents on a
council estate
. His father was a self-employed plasterer, his mother a nurse. He attended
Parmiter's School
in nearby
Garston
. After finishing sixth form in 1985 with six
O Levels
and two
A level
passes in English Literature and History with C and D grades respectively, failing his third subject, Mathematics,
[4]
[5]
he was hired as a clerk with the Lombard Street branch of the
Coutts
private bank,
[6]
where he settled paper cheques, crediting and debiting client accounts.
[7]
In 1987, Leeson moved to
Morgan Stanley
's Futures and Options
back office
, clearing and settling listed
derivatives
transactions. With few prospects for a front office role, he joined
Barings Bank
two years later, at £12,000 (equivalent to £42,634 in 2023) a year. With four other settlement specialists, he was briefly seconded to
Hong Kong
to troubleshoot Barings' back office in the Indonesian capital of
Jakarta
.
Leeson was then transferred to Baring's Jakarta office in 1990 where he handled some of Barings unpaid share certificates which amounted to £100 million.
[8]
He returned to
London
in September 1991 to investigate a case of
fraud
in which a Barings employee had used a client's account to trade on a proprietary basis until
margin calls
from the clearinghouses unraveled the scheme.
[9]
Career
[
edit
]
Barings Bank
[
edit
]
In April 1992, Barings decided to open a Futures and Options office in Singapore, executing and clearing transactions on the
Singapore International Monetary Exchange
(SIMEX).
[10]
Barings had held a seat on SIMEX for some time, but did not activate it until Leeson, appointed general manager, was sent to head both front office and back office operations. Prior to leaving, Leeson was denied a
broker
's licence in the UK because of committing fraud on his application.
[11]
He had failed to report a judgment against him entered by the
National Westminster Bank
. Neither Leeson nor Barings disclosed this denial when he applied for his licence in Singapore.
[12]
From 1992, Leeson made unauthorised
speculative
trades that at first made large profits for Barings: £10 million, which accounted for 10% of Barings' annual profit.
[13]
He earned a bonus of £130,000 on his salary of £50,000 for that year. Leeson used one of Barings'
error accounts
(accounts used to correct mistakes made in trading) to hide his losses.
[14]
[15]
He says that this account was first used to hide an error made by one of his subordinates. She had been assigned to buy 20
futures contracts
for
Fuji Bank
, but had sold them instead, costing Barings £20,000.
[16]
[17]
[8]
Leeson used this error account to cover further bad trades by himself and others. For example, he used it to cover mistakes made by one of his traders who frequently came to work after long nights of partying. Leeson believes that he first crossed into out-and-out criminal conduct when he forgot to reconcile a discrepancy of 500 contracts, costing Barings US$1.7 million. He concluded that the only way to hide such a massive error and keep his job was to hide it in the error account.
[8]
Leeson insists that he never used the account for his own gain, but in 1996 investigators had located approximately $35 million in various bank accounts tied to him.
[10]
Downfall and imprisonment
[
edit
]
By the end of 1992, the error account's losses exceeded £2 million, increasing to £23 million in late 1993. This amount ballooned to £208 million by the end of 1994.
[18]
Leeson had followed a
"doubling" strategy
: every time he lost money, he would bet double the amount that was lost to recoup the amount. This had been successful for him in the past, including once in 1993 where he was able to cover a £6 million negative balance in the error account and after which he vowed not to use the account again. Leeson had to maintain his reputation as a trading genius and soon found himself hiding his losses there again. As the losses grew higher, Leeson fabricated cover stories to explain why he needed more cash from London; his sterling reputation protected him from close scrutiny.
[19]
The beginning of the end occurred on 16 January 1995, when Leeson placed a
short straddle
in the
Singapore
and
Tokyo
stock exchanges
, essentially betting that the Japanese stock market would not move significantly overnight. The
Great Hanshin earthquake
hit early in the morning on 17 January, sending Asian markets, and Leeson's trading positions, downward. Leeson attempted to recoup his losses by making a series of increasingly risky new trades (using a long-long future
arbitrage
), this time betting that the
Nikkei Stock Average
would make a rapid recovery. The recovery failed to materialise.
[18]
Leeson left a note reading, "I'm sorry" and fled Singapore on 23 February. Losses eventually reached £827 million (
US$
1.4 billion), twice Barings' available trading capital. After a failed
bailout
attempt, Barings, which had been the UK's oldest
merchant bank
, was declared insolvent on 26 February.
[20]
After fleeing to Malaysia, Thailand and finally Germany, Leeson was arrested in
Frankfurt
and
extradited
to Singapore on 20 November 1995.
[21]
Leeson pleaded guilty to two counts of "deceiving the bank's auditors and of cheating the Singapore exchange",
[2]
including
forging
documents.
[22]
District judge Richard Magnus, who convicted Leeson, decided to sentence Leeson to six and a half years in
Changi Prison
in Singapore.
[23]
Leeson was released in July 1999 after serving at least two-thirds of his sentence (4 years and 4 months) for good behaviour, and having been diagnosed with
colon cancer
, which he survived despite grim forecasts. In 1996, Leeson published an autobiography,
Rogue Trader
, detailing his acts. A review in the financial columns of
The New York Times
stated, "This is a dreary book, written by a young man very taken with himself, but it ought to be read by banking managers and auditors everywhere."
[10]
In 1999, the book was made into a
film of the same name
starring
Ewan McGregor
and
Anna Friel
. The events also form the subject matter of a 1996 television documentary made by
Adam Curtis
, titled
Inside Story Special: £830,000,000 ? Nick Leeson and the Fall of the House of Barings
.
[24]
Post-release career
[
edit
]
In 2003, as a mature student, Leeson completed a BSc in Psychology at
Middlesex University
. He is a guest on the after-dinner and keynote speaking circuits,
[25]
[26]
stating in 2019 that "two events a month is enough to keep me in the manner to which I'm accustomed".
[27]
Leeson still deals in stock markets, but only with his own money.
[28]
Galway United F.C.
[
edit
]
Leeson was appointed commercial manager of
Galway United F.C.
in April 2005, rising to the position of general manager in November 2005.
[28]
By July 2007 he had become the club's chief executive officer. In February 2011, after the club encountered financial problems, he resigned his position.
[29]
Investigator of financial misconduct
[
edit
]
In March 2023, Leeson joined Red Mist Market Enforcement Unit, a corporate intelligence firm run by former Black Cube operative Seth Freedman, and turned into an investigator of financial misconduct cases.
[30]
Media appearances
[
edit
]
In June 2005, Leeson released a new book,
Back from the Brink: Coping with Stress
. It picks up his story where
Rogue Trader
left off, including in-depth conversations with psychologist
Ivan Tyrrell
. In 2013 he appeared in
Celebrity Apprentice Ireland
on
TV3
.
[31]
In July 2015, Singapore's national daily newspaper
The Straits Times
published an e-book titled
Guilty As Charged: 25 Crimes That Have Shaken Singapore Since 1965
, which included the Nick Leeson case as one of the top 25 crimes that shocked the nation since its independence in 1965. The book was borne out of collaboration between the Singapore Police Force and the newspaper itself. The paperback edition of the book was published and first appeared on the bookshelves in late June 2017. The paperback edition first entered the ST bestseller list on 8 August 2017, a month after its publication.
[32]
[33]
[34]
On 5 April 2007,
The Guardian
reported that
KPMG
, the liquidators of Barings, had sold a
trading jacket
thought to have been worn by Leeson while trading on SIMEX in Singapore. The jacket was offered for sale on
eBay
but it failed to reach its reserve price despite a highest bid of £16,100. It was subsequently sold for £21,000.
[35]
In October 2007 a similar jacket used by Leeson's team but not thought to have been worn by Leeson himself sold at auction for £4,000.
[36]
His name is mentioned in the credits of
Rogue Trader
together with Barings Bank losses of US$1,400,000,000.
Personal life
[
edit
]
Leeson married Lisa Sims, later also known as Lisa Leeson, on March 21 1992. The couple met in Jakarta, where both were working on Barings
Jakarta
's office in 1990.
[8]
Sims resigned from Barings Bank following her marriage to Leeson.
The couple divorced in 1997, a year after Leeson's arrest. Sims later worked as a flight attendant for
Virgin Atlantic
.
[8]
In 2003, four years after his release from Changi Prison, Leeson married Leona Tormay, an Irish
beautician
.
[37]
Works
[
edit
]
See also
[
edit
]
References
[
edit
]
- ^
"Leeson to have cancer operation"
.
BBC News
. 8 August 1998.
Archived
from the original on 3 August 2013
. Retrieved
26 November
2012
.
- ^
a
b
"Nick Leeson: biography part II"
. 1 March 2011.
Archived
from the original on 5 February 2012
. Retrieved
23 February
2012
.
- ^
"Former 'rogue trader' Nick Leeson joins corporate private eye firm"
.
The Guardian
. 22 March 2023.
Archived
from the original on 22 March 2023
. Retrieved
22 March
2023
.
- ^
Rawnsley, Judith H (1996).
Total Risk: Nick Leeson and the Fall of Barings Bank
. University of Michigan: HarperCollins. pp.
88
.
ISBN
9780887307812
.
- ^
Powell, Robin (10 July 2015).
"4 Lessons to Learn From Nick Leeson"
.
Archived
from the original on 31 March 2022
. Retrieved
13 September
2019
.
- ^
Michael, Costello (6 June 2011).
"The original rogue trader: interview with Nick Leeson"
.
Archived
from the original on 11 August 2023
. Retrieved
13 September
2019
.
- ^
Elga, Drummond (2007).
The Dynamics of Organizational Collapse: The Case of Barings Bank
. Routledge. p. 20.
ISBN
9780415399616
.
- ^
a
b
c
d
e
Leeson, Nick; Whitley, Edward (1996).
Rogue Trader
: How I Brought Down Barings Bank and Shook the Financial World
.
ISBN
0-316-51856-5
.
[
page needed
]
- ^
Laurent, Jacque (2015).
Global Derivative Debacles: From Theory To Malpractice
(Second ed.). World Scientific Publishing Company. p. 146.
ISBN
9789814699891
.
- ^
a
b
c
Floyd Norris (31 March 1996).
"Upper-Class Twits Made Me Do It"
.
New York Times
.
Archived
from the original on 28 August 2011
. Retrieved
23 February
2012
.
- ^
Maeda, Martha (2010).
The Complete Guide to Spotting Accounting Fraud & Cover-ups
. Atlantic Publishing Company. p. 31.
ISBN
978-1-60138-212-2
.
Archived
from the original on 11 August 2023
. Retrieved
18 November
2019
.
- ^
Hal S. Scott (2006).
International Finance: Transactions, Policy, and Regulation
.
Foundation Press
.
ISBN
978-1-59941-263-4
.
- ^
"Nick Leeson: biography part I"
. 1 March 2011.
Archived
from the original on 5 February 2012
. Retrieved
23 February
2012
.
- ^
"How Leeson broke the bank"
. BBC News. 22 June 1999.
Archived
from the original on 25 August 2017
. Retrieved
6 September
2018
.
- ^
"How account 88888 sank Britain's oldest bank"
.
The Independent
. 16 February 1996.
Archived
from the original on 20 June 2022.
- ^
"The man who broke the queen's bank"
.
The Irish Times
. 24 February 1996.
Archived
from the original on 11 December 2022
. Retrieved
6 September
2018
.
- ^
"Barings rogue trader Nick Leeson: 'Money is not my motivation'
"
.
The Daily Telegraph
. 19 August 2012.
Archived
from the original on 6 September 2018
. Retrieved
6 September
2018
.
- ^
a
b
Monthe, Paul (February 2007).
"How Nick Leeson caused the collapse of Barings Bank"
. Next Finance.
Archived
from the original on 4 December 2018
. Retrieved
4 December
2018
.
- ^
Marthinsen, John E. (2018). "Barings Bank PLC: Leeson's Lessons".
Risk Takers
. De Gruyter. pp. 200?204.
ISBN
9781547400058
.
- ^
"25 Million Pounds"
. 27 December 2009. Archived from
the original
on 29 March 2012
. Retrieved
23 February
2012
.
- ^
"Bonn approves Leeson's extradition"
.
Archived
from the original on 4 December 2018
. Retrieved
4 December
2018
.
- ^
"Nick Leeson: Rogue Trader"
.
Crime & Investigation Network
.
Archived
from the original on 2 February 2012
. Retrieved
24 February
2012
.
- ^
"Singapore Sentences Leeson to 6 1/2 Years in Prison"
.
The New York Times
. 2 December 1995.
Archived
from the original on 6 December 2021
. Retrieved
6 December
2021
.
- ^
"Inside Story Special ? BBC One London ? 12 June 1996"
.
BBC Genome
.
Archived
from the original on 6 January 2016
. Retrieved
20 October
2015
.
- ^
Culshaw, Peter (8 January 2009).
"Nick Leeson Lecturing Others on The Current Recession"
.
The Daily Telegraph
. London.
Archived
from the original on 16 June 2012
. Retrieved
23 February
2012
.
- ^
"Nick Leeson: Infamous Rogue Trader Responsible For The Collapse of Barings Bank In 1995"
. Archived from
the original
on 4 April 2012
. Retrieved
23 February
2012
.
- ^
Carroll, Rory (2 July 2019).
"Nick Leeson: lucrative new life of banking's most notorious rogue"
.
The Guardian
.
Archived
from the original on 17 September 2022
. Retrieved
11 September
2022
.
- ^
a
b
"Rogue trader Leeson 'eyes deals'
"
. BBC News. 7 March 2007.
Archived
from the original on 8 February 2012
. Retrieved
23 February
2012
.
- ^
Brendan White (2 February 2011).
"Leeson resigns Galway Utd CEO position"
. Archived from
the original
on 14 May 2012
. Retrieved
23 February
2012
.
- ^
"Rogue trader Nick Leeson who brought down a bank turns investigator of financial misdeeds"
.
The Straits Times
. Singapore. 22 March 2023.
Archived
from the original on 22 March 2023
. Retrieved
22 March
2023
.
- ^
"Judges and Contestants"
.
TV3.ie
. Archived from
the original
on 27 September 2013
. Retrieved
25 September
2013
.
- ^
"Guilty As Charged: Shocking crimes that have shaken Singapore since 1965"
.
The Straits Times
. 14 May 2016.
Archived
from the original on 15 May 2016
. Retrieved
6 January
2021
.
- ^
"Guilty As Charged: 25 crimes that shook Singapore"
.
The Straits Times
. 8 August 2017.
Archived
from the original on 11 August 2017
. Retrieved
6 January
2021
.
- ^
"Guilty As Charged: Rogue trader Nick Leeson brought down Britain's oldest merchant bank Barings"
.
The Straits Times
. 15 May 2016.
Archived
from the original on 8 January 2021
. Retrieved
6 January
2021
.
- ^
Wearden, Graeme (5 April 2007).
"Nick Leeson's jacket raises £21,000"
.
The Guardian
. London.
Archived
from the original on 3 April 2010
. Retrieved
23 February
2012
.
- ^
"Howard makes his mark at Norwood's Distressed Investing Dinner"
.
Norwood
. 16 October 2007. Archived from
the original
on 25 February 2012
. Retrieved
23 February
2012
.
- ^
McDonald, Brian (14 June 2003).
"Rogue trader Leeson ties knot with Irish love"
.
Irish Independent
.
Archived
from the original on 24 January 2012
. Retrieved
23 February
2012
.
External links
[
edit
]
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