Nick Leeson

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

    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.
  2. Trading

    The World's 10 Most Famous Traders Of All Time

    A review of the most famous and infamous traders in history.
  3. Investing

    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.
  4. Markets

    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.
  5. 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.
  6. ETFs & Mutual Funds

    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.
  7. Personal Finance

    Capital Losses and Tax

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

    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%.
  9. ETFs & Mutual Funds

    Top 2 ETFs For Investing in Singapore (EWS, EWSS)

    Discover information about the two primary exchange-traded funds, or ETFs, that offer investors exposure to the emerging market economy of Singapore.
  10. Trading

    The Most Famous Forex Traders Of All Time

    The five most famous forex traders share common virtues such as strong self-confidence.
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 >>
  5. Is the difference the cost basis?

    I was on unemployment for part of 2015 and barely made any money for 2015. I had to sell some stocks to live on and am now ... Read Answer >>
  6. Are there high capital gains when there's low income?

    My father sold a piece of property that he inherited in order to pay for assisted living expenses. He ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center