Nick Leeson is best known as the rogue trader, notorious for bankrupting Barings Bank, the UK’s oldest merchant bank. In 1992 Barings opened up an office in Singapore and appointed Leeson to head both front and back office operations. Leeson had been denied a broker’s license in the UK because of committing fraud on his application form but this wasn’t disclosed when he applied for his license in Singapore.
From the start Leeson made occasional unauthorized speculative trades. He opened a false customer account that was first used to hide an error made by one of his colleagues who accidentally sold futures when she had been asked to buy them.
Leeson had heard that the number eight was considered lucky in Asia so he gave this account the number 8888. Unfortunately, it turned out not to be a lucky number for Nick. He would book the trading errors to this account and then wait for them to move back in his favour. If the market moved against him, he would just double down hoping that the market would retrace itself half as much in order for him to break even.
By the end of his first year the error accounts losses exceeded £2 million, increasing to £23 million the next year and then ballooning to £208 million by the end of 1994. In January 1995, the Kobe earthquake struck Japan early in the morning sending Asian markets and Leeson’s trading positions into the red. He did what he usually did and bought more in desperation but the market continued to fall.
Eventually, Nick couldn’t handle the stress of hiding the losses and booked a plane ticket to Germany. He left a post-it note on his desk that said “I’m sorry”. Leeson was arrested when his plane landed in Frankfurt and after a failed bailout attempt, Barings was declared insolvent. Leeson pleaded guilty to two counts of deceiving the bank’s auditors and of cheating the Singapore exchange including forging documents. He was sentenced to six and a half years in jail in Singapore and was released in 1999.
He published an autobiography that was called Rogue Trader which was later made into a film starring Ewan McGregor. When Leeson was hired, the management of Barings made him the General Manager of the Singapore branch and the Chief Trader while also being responsible for settling his own trades. These jobs are usually held by different people which would have made it much harder for Leeson to hide his losses from management in London.
What is Nick Doing Now?
Nick Leeson currently lives in County Galway, Ireland with his wife and is a regular public speaker. Despite losing nearly £1 billion, he’s still an active trader and you can follow his trading live over at bullandbearcap.com. According to trading results posted on his Twitter account, it looks like he’s a profitable trader! Leeson has an estimated net worth of £2.3 million as of 2022.
