“Nick Leeson…Who?”

Friday, January 25, 2008

Nick Leeson, once the poster boy for moronic trading, has been replaced by Jerome Kerviel. So-called "rogue trader," Nick Leeson, racked up losses of approximately $1.4 billion at Barings Bank in 1995 that led to its collapse. Convicted of fraud, he was sentenced to a jail term of six-and-a-half years. Surely, Monsieur Kerviel will be treated to the same.

Perhaps Nick Leeson will still be remembered a decade from now due to the Barings collapse, but the losses by Kerviel at Societe Generale , France 's second-largest bank, will always be larger. Societe Generale stunned financial markets this morning when it announced the aforementioned trader had cost it an unfathomably large $7.1 billion in one of the largest ever frauds by a rogue employee.

Well, that's what Societe Generale wants us to believe, but I don't. So the second largest bank of France is so woefully unequipped to manage risk that it allowed one man to build up a $7.1-billion loss in less than one year? If that's true, then 100% of all depositors should withdraw 100% of their funds immediately. The bank cannot be trusted.

Personally, I believe its part of the staggering losses due to the CDO garbage on its balance sheet and the bank just doesn't want to admit it. The bank also announced a $3-billion sub-prime related write-down this morning.

It's too bad Leeson and Kerviel weren't CEO's of their banks; if they were, they'd be paid hundreds of millions of dollars to just go away. CEO's are not held criminally accountable for idiotic decisions - no matter how financially debilitating they are to shareholders.

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http://www.insidefutures.com/article/55228/%20%E2%80%9CNick%20Leeson%E2%80%A6Who?%E2%80%9D.html

"part of the staggering losses due to the CDO garbage".

Then he transfered to the trading side where he knew how to get round those self same security protocols

Banks, don't ya just love 'em? Always so careful with their money :sarcasm: