2. Nicholas Leeson

Son of a Plasterer from Watford.

Failed his final maths exam and left school.

In early 1980's joined as a clerk with Royal
Bank Coutts.

Finally, settled at Barings Bank.

Promoted to the trading floor.

3. Account No. 88888

The error a/c was not known to the seniors in
UK.

He then engaged into a significant volume of
cross trading between a/c 88888 and other
a/cs.

Leeson would instruct the settlement staffs to
break down the total number of contracts into
several different trades.

Profits to be credited to a/c 92000.
Was a speculation disguised with the help of a/c
88888.

4. Leeson and his Game
 Arbitrage between “SIMEX” and “OSE”.
 Leeson went short on Osaka and long in
Singapore.
 Unauthorized trades which was hidden in the
88888 along with all the losses.
 In industry parlance, Leeson sold straddles.
 Leeson earned premium income from selling
well over 37000 straddles over a 14 month
period.
 His straddles position strikes were in the range
of 18500 to 20000.

5. The Seeds were Sown

On 17th Jan, 1995, devastating earthquake hit
Kobe city in Japan.

Huge losses over his long futures positions of
27158 March '95 contracts.

He requested extra funds to continue trading
and managed to get them.

Tried single handed to change the market
sentiment.

Over the next 3 weeks he doubled his long
position and reached 55206 March and 55640
June open contracts.

6. Greed showed its Way

The gamble became unmanageable.

Leeson had accumulated losses to the extent of
GBP 827m USD 1.4bn.

The bubble burst when Barings felt the heat
and failed to meet its obligations.

In February 1995, Leeson and his wife were
arrested in Frankfurt.

7. Nick Leeson Today

Made a heartfelt apology to his former boss.

Mr. Leeson has written a couple of books and
gained a psychology degree.

Most recently, he resigned from Galway United FC
in February 2011, having risen to chief executive
officer since joining the company in 2005.

After-dinner speaker and attends conferences.

8. “I think Rogue Trading is a daily occurrence
in the financial markets. Not enough focus
goes on those risk management areas, those
compliance areas, those settlement areas,
that can ultimately save them money.”
- Nick Leeson