Nick Leeson
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Nicholas William Leeson (born 25 February 1967) is an English former
derivatives The derivative of a function is the rate of change of the function's output relative to its input value. Derivative may also refer to: In mathematics and economics * Brzozowski derivative in the theory of formal languages * Formal derivative, an ...
trader whose fraudulent, unauthorized and
speculative Speculative may refer to: In arts and entertainment *Speculative art (disambiguation) *Speculative fiction, which includes elements created out of human imagination, such as the science fiction and fantasy genres **Speculative Fiction Group, a Per ...
trades resulted in the 1995 collapse of
Barings Bank Barings Bank was a British merchant bank based in London, and one of England's List of oldest banks in continuous operation, oldest merchant banks after Berenberg Bank, Barings' close collaborator and German representative. It was founded in 1762 ...
, the United Kingdom's oldest
merchant bank A merchant bank is historically a bank dealing in commercial loans and investment. In modern British usage it is the same as an investment bank. Merchant banks were the first modern banks and evolved from medieval merchants who traded in commodi ...
. Leeson was convicted of
financial crime Financial crime is crime committed against property, involving the unlawful conversion of the ownership of property (belonging to one person) to one's own personal use and benefit. Financial crimes may involve fraud (cheque fraud, credit card fr ...
in
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
court and served over four years in
Changi Prison Changi Prison Complex, often known simply as Changi Prison, is a prison in Changi in the eastern part of Singapore. History First prison Before Changi Prison was constructed, the only penal facility in Singapore was at Pearl's Hill, beside t ...
. Between 2005 and 2011, Leeson had senior management roles at
League of Ireland The League of Ireland ( ga, Sraith na hÉireann), together with the Football Association of Ireland, is one of the two main governing bodies responsible for organising association football in the Republic of Ireland. The term was originally us ...
club
Galway United Galway United Football Club (Irish language, Irish: ''Cumann Peile Ghaillimh Aontaithe'') is an List of association football clubs in the Republic of Ireland, Irish association football club based in Galway. They play in the League of Ireland Fi ...
. 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 Corporate responsibility is a term which has come to characterize a family of professional disciplines intended to help a corporation stay competitive by maintaining accountability to its four main stakeholder groups: customers, employees, shareh ...
.


Early life

Nick Leeson was born in
Watford Watford () is a town and borough in Hertfordshire, England, 15 miles northwest of Central London, on the River Colne. Initially a small market town, the Grand Junction Canal encouraged the construction of paper-making mills, print works, a ...
,
Hertfordshire Hertfordshire ( or ; often abbreviated Herts) is one of the home counties in southern England. It borders Bedfordshire and Cambridgeshire to the north, Essex to the east, Greater London to the south, and Buckinghamshire to the west. For govern ...
, and attended
Parmiter's School Parmiter's School is a co-educational state comprehensive school with academy status in Garston, Hertfordshire, close to the outskirts of North West London, England with a long history. Although the school admits pupils of all abilities it is ...
in nearby Garston. Born to working-class parents on a
council estate Public housing in the United Kingdom, also known as council estates, council housing, or social housing, provided the majority of rented accommodation until 2011 when the number of households in private rental housing surpassed the number in so ...
, his father was a self-employed plasterer, his mother a nurse. After finishing sixth form in 1985 with six
O Levels The O-Level (Ordinary Level) is a subject-based qualification conferred as part of the General Certificate of Education. It was introduced in place of the School Certificate in 1951 as part of an educational reform alongside the more in-depth ...
and two
A level The A-Level (Advanced Level) is a subject-based qualification conferred as part of the General Certificate of Education, as well as a school leaving qualification offered by the educational bodies in the United Kingdom and the educational aut ...
passes in English Literature and History with C and D grades respectively, failing his third subject, Mathematics, he was hired as a clerk with the Lombard Street branch of the
Coutts Coutts & Co. is a London-headquartered private bank and wealth manager. Founded in 1692, it is the eighth oldest bank in the world. Today, Coutts forms part of NatWest Group's wealth management division. In the Channel Islands and the Isle of ...
private bank, where he settled paper cheques, crediting and debiting client accounts. In 1987, Leeson moved to
Morgan Stanley Morgan Stanley is an American multinational investment management and financial services company headquartered at 1585 Broadway in Midtown Manhattan, New York City. With offices in more than 41 countries and more than 75,000 employees, the fir ...
's Futures and Options
back office A back office in most corporations is where work that supports ''front office'' work is done. The front office is the "face" of the company and is all the resources of the company that are used to make sales and interact with customers and client ...
, clearing and settling listed
derivatives The derivative of a function is the rate of change of the function's output relative to its input value. Derivative may also refer to: In mathematics and economics * Brzozowski derivative in the theory of formal languages * Formal derivative, an ...
transactions. With few prospects for a front office role, he joined
Barings Bank Barings Bank was a British merchant bank based in London, and one of England's List of oldest banks in continuous operation, oldest merchant banks after Berenberg Bank, Barings' close collaborator and German representative. It was founded in 1762 ...
two years later, at £12,000 () a year. With four other settlement specialists, he was briefly seconded to
Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
to troubleshoot Barings' back office in the Indonesian capital of
Jakarta Jakarta (; , bew, Jakarte), officially the Special Capital Region of Jakarta ( id, Daerah Khusus Ibukota Jakarta) is the capital and largest city of Indonesia. Lying on the northwest coast of Java, the world's most populous island, Jakarta ...
. He returned to
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
in September 1991 to investigate a case of
fraud In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compens ...
in which a Barings employee had used a client's account to trade on a proprietary basis until
margin call ''Margin Call'' is a 2011 American drama film written and directed by J. C. Chandor in his feature directorial debut. The principal story takes place over a 24-hour period at a large Wall Street investment bank during the initial stages of the ...
s from the clearinghouses unraveled the scheme.


Career

In April 1992, Barings decided to open a Future and Options office in Singapore, executing and clearing transactions on the
Singapore International Monetary Exchange The Singapore Exchange Limited (SGX) is a Singaporean investment holding company that provides different services related to securities and derivatives trading and others. SGX is also a member of the World Federation of Exchanges and the Asian ...
(SIMEX). Barings had held a seat on SIMEX for some time, but did not activate it until Leeson, appointed general manager, was sent over to head both front office and back office operations. Prior to leaving, Leeson was denied a
broker A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...
's licence in the UK because of committing fraud on his application. He had failed to report a judgment against him entered by the
National Westminster Bank National Westminster Bank, commonly known as NatWest, is a major retail and commercial bank in the United Kingdom based in London, England. It was established in 1968 by the merger of National Provincial Bank and Westminster Bank. In 2000, it ...
. Neither Leeson nor Barings disclosed this denial when he applied for his licence in Singapore. From 1992, Leeson made unauthorised
speculative Speculative may refer to: In arts and entertainment *Speculative art (disambiguation) *Speculative fiction, which includes elements created out of human imagination, such as the science fiction and fantasy genres **Speculative Fiction Group, a Per ...
trades that at first made large profits for Barings: £10 million, which accounted for 10% of Barings' annual profit. He earned a bonus of £130,000 on his salary of £50,000 for that year. Leeson's luck soon went sour and he used one of Barings' error accounts (accounts used to correct mistakes made in trading) to hide his losses. He says that this account was first used to hide an error made by one of his subordinates; she had been assigned to buy twenty
futures contract In finance, a futures contract (sometimes called a futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset ...
s for
Fuji Bank The was one of Japan's major banks during the post–World War II era. It combined with Dai-Ichi Kangyo Bank and the Industrial Bank of Japan in 2000 to form Mizuho Financial Group, and changed its name to Mizuho Corporate Bank in 2002 after t ...
, but had sold them instead, costing Barings £20,000. However, Leeson used this error account to cover further bad trades by himself and others. For example, he used it to cover a number of 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. 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.


Downfall and imprisonment

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. Leeson had followed a "doubling" strategy: every time he lost money, he would bet double the amount that was lost in order 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. However, Leeson had to maintain his reputation as a trading genius and soon found himself hiding his losses there again. As the losses grew higher and higher, Leeson fabricated cover stories to explain why he needed more cash from London; his sterling reputation protected him from close scrutiny. The beginning of the end occurred on 16 January 1995, when Leeson placed a
short straddle In finance, a straddle strategy involves two transactions in options on the same underlying, with opposite positions. One holds long risk, the other short. As a result, it involves the purchase or sale of particular option derivatives that a ...
in the
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
and
Tokyo Tokyo (; ja, 東京, , ), officially the Tokyo Metropolis ( ja, 東京都, label=none, ), is the capital and largest city of Japan. Formerly known as Edo, its metropolitan area () is the most populous in the world, with an estimated 37.468 ...
stock exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
s, essentially betting that the Japanese stock market would not move significantly overnight. However, the
Great Hanshin earthquake The , or Kobe earthquake, occurred on January 17, 1995, at 05:46:53 JST (January 16 at 20:46:53 UTC) in the southern part of Hyōgo Prefecture, Japan, including the region known as Hanshin. It measured 6.9 on the moment magnitude scale and had ...
hit early in the morning on 17 January, sending Asian markets, and Leeson's trading positions, into a tailspin. Leeson attempted to recoup his losses by making a series of increasingly risky new trades (using a long-long future
arbitrage In economics and finance, arbitrage (, ) is the practice of taking advantage of a difference in prices in two or more markets; striking a combination of matching deals to capitalise on the difference, the profit being the difference between the ...
), this time betting that the Nikkei Stock Average would make a rapid recovery. However, the recovery failed to materialise. Leeson left a note reading, "I'm sorry" and fled Singapore on 23 February. Losses eventually reached £827 million (
US$ The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
1.4 billion), twice Barings' available trading capital. After a failed
bailout A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy. A bailout differs from the term ''bail-in'' (coined in 2010) under which the bondholders or depositors of global sys ...
attempt, Barings, which had been the UK's oldest
merchant bank A merchant bank is historically a bank dealing in commercial loans and investment. In modern British usage it is the same as an investment bank. Merchant banks were the first modern banks and evolved from medieval merchants who traded in commodi ...
, was declared insolvent on 26 February. After fleeing to Malaysia, Thailand and finally Germany, Leeson was arrested in
Frankfurt Frankfurt, officially Frankfurt am Main (; Hessian: , "Frank ford on the Main"), is the most populous city in the German state of Hesse. Its 791,000 inhabitants as of 2022 make it the fifth-most populous city in Germany. Located on its na ...
and
extradited Extradition is an action wherein one jurisdiction delivers a person accused or convicted of committing a crime in another jurisdiction, over to the other's law enforcement. It is a cooperative law enforcement procedure between the two jurisdi ...
back to Singapore on 20 November 1995. Leeson pleaded guilty to two counts of "deceiving the bank's auditors and of cheating the Singapore exchange", including
forging Forging is a manufacturing process involving the shaping of metal using localized compressive forces. The blows are delivered with a hammer (often a power hammer) or a die. Forging is often classified according to the temperature at which i ...
documents. District judge Richard Magnus, who convicted Leeson, decided to sentence Leeson to six and a half years in
Changi Prison Changi Prison Complex, often known simply as Changi Prison, is a prison in Changi in the eastern part of Singapore. History First prison Before Changi Prison was constructed, the only penal facility in Singapore was at Pearl's Hill, beside t ...
in Singapore. 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 Colorectal cancer (CRC), also known as bowel cancer, colon cancer, or rectal cancer, is the development of cancer from the colon or rectum (parts of the large intestine). Signs and symptoms may include blood in the stool, a change in bowel mo ...
, which he survived despite grim forecasts at the time. In 1996, Leeson published an autobiography, ''
Rogue Trader A rogue trader is person who makes financial trades in an unauthorised manner. Rogue trader may also refer to: * ''Rogue Trader'' (book), the autobiography of (and later a movie about) Nick Leeson, the man who caused the collapse of Barings Bank * ...
'', 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." In 1999, the book was made into a film of the same name starring
Ewan McGregor Ewan Gordon McGregor ( ; born 31 March 1971) is a Scottish actor. His accolades include a Golden Globe Award, a Primetime Emmy Award, and the BAFTA Britannia Humanitarian Award. In 2013, he was appointed Officer of the Order of the British ...
and
Anna Friel Anna Louise Friel (born 12 July 1976) is an English actress. Born in Rochdale, Greater Manchester, she has been acting professionally since age 13. Friel achieved fame with her portrayal of Beth Jordache on the British soap opera ''Brookside'' ( ...
. The events also form the subject matter of a 1996 television documentary made by
Adam Curtis Adam Curtis (born 26 May 1955) is an English documentary filmmaker. Curtis began his career as a conventional documentary producer for the BBC throughout the 1980s and into the early 1990s. The release of ''Pandora's Box (British TV series), ...
, titled '' Inside Story Special: £830,000,000 – Nick Leeson and the Fall of the House of Barings''.


Later career

In 2003, as a mature student, Leeson completed a BSc in Psychology at
Middlesex University Middlesex University London (legally Middlesex University and abbreviated MDX) is a public research university in Hendon, northwest London, England. The name of the university is taken from its location within the historic county boundaries ...
, and then married Leona Tormay, an Irish
beautician Cosmetology (from Greek , ''kosmētikos'', "beautifying"; and , ''-logia'') is the study and application of beauty treatment. Branches of specialty include hairstyling, skin care, cosmetics, manicures/pedicures, non-permanent hair removal such as ...
. He is a guest on the after-dinner and keynote speaking circuits, stating in 2019 that "two events a month is enough to keep me in the manner to which I'm accustomed". Leeson still deals in the stock markets, but only with his own money.


Galway United F.C.

Leeson was appointed commercial manager of
Galway United F.C. Galway United Football Club (Irish: ''Cumann Peile Ghaillimh Aontaithe'') is an Irish association football club based in Galway. They play in the League of Ireland First Division. They were founded as Galway Rovers F.C. during the 1930s. They m ...
in April 2005, rising to the position of general manager in November 2005. 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.


Media appearances

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 ''Celebrity Apprentice Ireland'' is an Irish reality television series, in which a group of Irish celebrities compete for the chance to win €25,000 for their chosen charity. Caroline Downey, the managing director of MCD is the head judge in t ...
'' on TV3. In July 2015, Singapore's national daily newspaper ''
The Straits Times ''The Straits Times'' is an English-language daily broadsheet newspaper based in Singapore and currently owned by SPH Media Trust (previously Singapore Press Holdings). ''The Sunday Times'' is its Sunday edition. The newspaper was established ...
'' 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. On 5 April 2007, ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'' reported that
KPMG KPMG International Limited (or simply KPMG) is a multinational professional services network, and one of the Big Four accounting organizations. Headquartered in Amstelveen, Netherlands, although incorporated in London, England, KPMG is a net ...
, the liquidators of Barings, had sold a
trading jacket A trading jacket is a blazer garment worn by a broker who executes trades by open outcry in and around the trading pits of various financial exchanges. Throughout the twentieth century, trading jackets were simply white. Following counterculture o ...
thought to have been worn by Leeson while trading on SIMEX in Singapore. The jacket was offered for sale on
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became a ...
but it failed to reach its reserve price despite a highest bid of £16,100. It was subsequently sold for £21,000. 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. His name is mentioned in the credits of the
Rogue Trader (film) ''Rogue Trader'' is a 1999 British biographical drama film written and directed by James Dearden and starring Ewan McGregor and Anna Friel. The film centers on the life of former derivatives broker Nick Leeson and the 1995 collapse of Barings Ba ...
together with Barings Bank losses of 1.400.000.000 US$.


Works

* *


See also

*
Chia Teck Leng Chia Teck Leng (谢德龙 Xìe Délóng; born 11 October 1959) is a convicted white-collar criminal from Singapore, who was known for his four-year commercial fraud which involved the swindling of $117 million from four foreign major banks to fe ...
*
Clarence Hatry Clarence Charles Hatry (16 December 1888 – 10 June 1965) was an English company promoter, financier, bankrupt, bookseller and publisher. The fall of the Hatry group in September 1929, which had been worth about £24 million (), is cited as a co ...
*
Speculation In finance, speculation is the purchase of an asset (a commodity, good (economics), goods, or real estate) with the hope that it will become more valuable shortly. (It can also refer to short sales in which the speculator hopes for a decline i ...
in financial markets *
List of trading losses The following contains a list of trading losses of the equivalent of USD100 million or higher. Trading losses are the amount of principal losses in an account. Because of the secretive nature of many hedge funds and fund managers, some notable los ...
*
Jérôme Kerviel Jérôme Kerviel (; born 1977) is a French rogue trader who was convicted and imprisoned in the 2008 Société Générale trading loss for breach of trust, forgery and unauthorized use of the bank's computers, resulting in losses valued at € ...
*
Kweku Adoboli Kweku Adoboli (born 21 May 1980) is a Ghanaian investment manager and former stock trader. He was convicted of illegally trading away US$2 billion (£1.3 billion STG) as a trader for Swiss investment bank UBS. While at the bank he pr ...
*
Toshihide Iguchi (1951–2019) was an Executive VP and U.S. Government Bond trader at Daiwa Bank's New York Branch, who was responsible for $1.1 billion in unauthorized trading losses accumulated over a period of 12 years beginning in 1983. Early life Toshihide ...
*
Galway United Galway United Football Club (Irish language, Irish: ''Cumann Peile Ghaillimh Aontaithe'') is an List of association football clubs in the Republic of Ireland, Irish association football club based in Galway. They play in the League of Ireland Fi ...
*
CITIC Group CITIC Group Corporation Ltd., formerly the China International Trust Investment Corporation (CITIC), is a state-owned investment company of the People's Republic of China, established by Rong Yiren in 1979 with the approval of Deng Xiaoping ...
*
White collar crime The term "white-collar crime" refers to financially motivated, nonviolent or non-directly violent crime committed by individuals, businesses and government professionals. It was first defined by the sociologist Edwin Sutherland in 1939 as "a ...


References


External links

* * * * * * * * {{DEFAULTSORT:Leeson, Nick 1967 births 1992 crimes in Singapore Living people 20th-century English criminals Alumni of Middlesex University British people imprisoned abroad English bankers 20th-century English businesspeople English fraudsters Fugitive financiers People from County Galway People from Watford Prisoners and detainees of Singapore Rogue traders People educated at Parmiter's School, Garston Galway United F.C. Irish expatriates in England Fugitives wanted by Singapore