DEFINITION of 'Nick Leeson'

A former manager with England's Barings Bank, Leeson became a rogue trader while heading up the company's Singapore division in the early 1990s. After originally earning massive profits for Barings via several unauthorized trades in 1992, Leeson eventually lost over $1 billion in company capital while hiding the losses in a little-used errors account that was hidden from his superiors. Most of the rogue trades occurred in the futures market, where his losses multiplied quickly in the final weeks before he fled his office.

BREAKING DOWN 'Nick Leeson'

Leeson was later arrested and served six years in a Singapore prison. His trading losses single-handedly brought down Barings Bank, the first investment bank founded in England. The firm was declared insolvent less than a week after Leeson's trading losses were discovered.

Many lessons were learned about internal controls and trade auditing as a result of Mr. Leeson's rogue trading. As has been seen before, a trader trying to hide losses will tend to risk more in an attempt to right the initial wrongs. Lesson's trading losses were originally just under $200 million, but they skyrocketed to over $1 billion when he made a risky futures bet in the hopes of evening out prior losses.

RELATED TERMS
  1. Rogue Trader

    A trader who acts independently of others - and, typically, recklessly ...
  2. Barings Bank

    A British merchant bank that was started in 1762, and for centuries ...
  3. Bear Straddle

    A speculative options trading strategy that consists of purchasing ...
  4. SGD (Singapore Dollar)

    The currency abbreviation for the Singapore dollar (SGD), the ...
  5. Jerome Kerviel

    A trader for French securities firm Société Générale that was ...
  6. Capital Loss

    The loss incurred when a capital asset (investment or real estate) ...
Related Articles
  1. Trading

    Trading's 6 Biggest Losers

    These "rogue traders" are famous for their billion-dollar mistakes.
  2. Trading

    The Three Most Notorious Rogue Traders

    The conviction of former Barclays trader Tom Hayes has once again shone the spotlight on rogue traders. Here are three of them.
  3. Trading

    The World's 10 Most Famous Traders Of All Time

    A review of the most famous and infamous traders in history.
  4. Financial Advisor

    The 10 Must Watch Movies For Finance Professionals

    Finance makes for great cinema; here are 10 of the best offerings by Hollywood on the subject.
  5. Financial Advisor

    10 Must Watch Documentaries for Finance Professionals

    Find out about some of the best documentaries that finance professionals can watch to gain a better understanding of their industry.
  6. Trading

    5 Must Watch Films and Documentaries for Day Traders

    Discover these five must-watch films and documentaries for day traders reviewed with the takeaway lessons that inspire, motivate and entertain.
  7. Investing

    EWS: iShares MSCI Singapore ETF

    Learn more about BlackRock Advisor's iShares Singapore MSCI exchange-traded fund, which looks to mirror the holdings and yield from Singapore markets.
  8. Taxes

    Capital Losses and Tax

    Capital losses are never fun to incur, but they can reduce your taxable income. Knowing the rules for capital losses can help you maximize your deductions and make better choices about when to ...
  9. Managing Wealth

    Capital Losses and Tax

    When an investment sells for less than its purchase price, the difference is a capital loss.
  10. Investing

    Singapore GDP Accelerates in Q1 on Manufacturing

    Singapore’s GDP expanded 1.8% year-over-year in Q1 2016. On a quarterly basis, it grew by an annualized 0.2%.
RELATED FAQS
  1. How did derivatives trader Nick Leeson contribute to the fall of Barings Bank?

    When an earthquake shook Kobe, Japan in 1995, it also broke open an ongoing scandal within the walls of Barings Bank. At ... Read Answer >>
  2. Who set the record loss for "rogue traders"?

    Every trader wants to set a record, but the hope is that it will be a record profit rather than a loss. With losses topping ... Read Answer >>
  3. Why is Singapore considered a tax haven?

    Discover why Singapore is considered a tax haven, and learn about corporate tax rates and incentives that make this city-state ... Read Answer >>
  4. How did Peter Young gain infamy as a "rogue trader"?

    Peter Young's notoriety as one of the most memorable rogue traders is not a result of the amount of money he stole, but the ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center