Write Up on “Rogue Trader” movie

Submitted to

Prakar Capital

Submitted by

Atmakuri Ram Mohan

Assignment no: 2: Write up on “Rogue trader” movie

Atmakuri Ram Mohan, IFIM Bschool, Bangalore

ROGUE TRADER

Rogue Trader is a movie based on "Nick" Leeson life. Nick

Leeson – the rogue trader whose unchecked risk-taking caused the biggest financial scandal of

the 20th century. The collapse of Barings Bank (personal bank to HM The Queen) in 1995 and

Nick Lesson’s role in it is one of the most spectacular debacles in modern financial history. How

could one trader bring down the banking empire that had funded the Napoleonic Wars?

His first job was with Morgan Stanley as a settlements clerk he

dreamed of becoming a trader. To this end he quit his job and took a position with Barings

Bank, the institution that was innovative in the way it dealt with futures and one which he

would help to make world famous. At the start of his career with Barings, Nick sent to Jakarta,

Indonesia and was faced with the unenviable task of sorting out a mess of one hundred million

pounds of share certificates (Bearer Bonds). This he achieved over time and was also significant

as it was here that he met his wife to be, Lisa Sims. Following his success in Jakarta, he was

asked to be the General Manager of a new team running a futures and options operation in the

SIMEX market in Singapore. In SIMEX he has two roles i.e. trading on floor and Back office work.

He used to have more inexperienced team member s in him team. The hustle and bustle of

trades that the now famous 88888 account was drawn up, originally as an errors account since

Barings did not want to be burdened by dealing with fifty errors a day as a result of hectic

trading and massive understaffing. However following the creation of this account, another

account was used to serve this purpose although the 88888 account (chosen because it was a

lucky number) was still active and would soon be used for another purpose altogether, namely

hiding ever increasing losses, the first one being to bail out a colleague who had made a

mistake (for long, she shorts the Future) and in so doing cost the bank twenty thousand

pounds.

In short span, Nick earned millions for Barings by betting on the future direction of the Nikkei Index. His bosses back in London, who viewed with glee his large profits, trusted the whiz kid. Leeson and his wife Lisa seemed to have everything: a salary of £50,000 with bonuses of up to £150,000, weekends in exotic places, a smart apartment and frequent parties and to top it all they even seemed to be very much in love. Barings believed that it wasn't exposed to any losses because Leeson claimed that he was executing purchase orders on behalf of a client. What the company did not realize is that it was responsible for error account 88888 where Leeson hide his losses.

Assignment no: 2: Write up on “Rogue trader” movie

Atmakuri Ram Mohan, IFIM Bschool, Bangalore

As the losses grew, Leeson requested extra funds to continue trading, hoping to extricate himself from the mess by more deals. Over three months he bought more than 20,000 futures contracts worth about $180,000 each in a vain attempt to move the market. Some three quarters of the $1.3 billion he lost Barings resulted from these trades. When Barings executives discovered what had happened, they informed the Bank of England that Barings was effectively bust. In his wake Nick Leeson had wiped out the 233 year old Baring investment Bank, who proudly counted HM The Queen as a client. The $1.3 billion dollars of liabilities he had run up was more than the entire capital and reserves of the bank.

He tries to escape but arrested in Frankfurt, Germany, Nick spent a few fraught months trying to escape extradition to Singapore. He failed and in December 1995 a court in Singapore sentenced him to six and a half years in prison.

Nick Lesson’s first wife Lisa divorced him while he was in prison. He married an Irish beautician, Leona Toomey.

Mother of all greediness

Is Speculation