BREAKING NEWS
March 8, 2007
Don't Bet Against Him
A disgraced trader will find open arms in the financial world
Nick Leeson, the rogue trader who brought down Barings Bank in the early 1990s, wants to make a comeback in the business that made him famous. Leeson, 40, told Bloomberg that he is contemplating a return to full-time trading turning his back on his recent career as an author, marketer for an Irish soccer club and motivational speaker.
For now, Leeson says he might only play with his own money, but you never know. "You wouldn't believe how many people have asked me to manage their money," he was quoted as saying.
Isn't it funny how time softens our impressions about people? Nick Leeson contemplating a return to trading is kind of like Donald Rumsfeld considering another crack at Iraq or Jeff Skilling thinking about a return to management. But what better time could there be for a man who once stole $1 billion to make bad currency bets. The road to redemption has been paved of late by ex-former analyst Henry Blodget, ex-former investment banker Frank Quattrone and I-promise-this-hedge-fund-won't-require-a-multi-billion-dollar-bailout John Meriwether.
In an era where Wall Street is slowly peeling back the rules and regulators, imagine the kind of wheeling and dealing Leeson could do. Think: Rogue Group Trading LLC in Stamford, Conn.
When I spoke to Leeson a couple of years ago, Sarbanes Oxley was just kicking in. Leeson was the keynote at a conference on compliance. He said many financial institutions were vulnerable to the kind of rogue trading he practiced. "Due diligence kind of sums it up," he said. "There wasn't any at Barings at the time. There were very simple checks that could have been done at the time. None were done."
Leeson could dazzle us and his clients with his trading prowess. In an interview with the local paper in Ireland where he now lives, Leeson assured the locals he wasn't about to snooker the bank. "If you have an efficiently-run organization with effective checks, you've no reason to be scared of someone like me," he said.
Marketwatch
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Just the Right Motivational Moment For Nick Leeson
By: Pete Kendall, March 12, 2007 |
Leverage almost always causes massive losses eventually because of the psychological stress that owning them induces. You have already read of the billion-dollar debacles at Barings Bank, and other institutions that speculated in leveraged derivatives. It is traditional to discount the representative value of derivatives because traders will presumably get out of losing positions well before they wreak destruction. Well, maybe. It is at least as common a human reaction for speculators to double their bets when the market goes against a big position.
Conquer the Crash |
Unbelievable complacency!!! I'll let the article speak for itself:
All of this would make for fertile ground for Leeson, who could dazzle us and his clients with his trading prowess.
Of course, the title of the article is:
Don't Bet Against Him
Let me get this straight. Here we have a man who, with the help of poor trading skills and fraud, took down the oldest British financial institution, who's customers included the Queen. He's on the road to redemption and wants to start trading again. He can dazzle us with his trading prowess, and there's no reason to be scared of him. How do YOU spell complacency?
--Alain Laverdiere
I’m not sure which aspect is scarier, that Leeson is back and trading or that he is now a self-help guru who counsels people on “Coping With Stress.” His original coping strategy, the one to which he owes his fame, helped him hide losses for years on end. For this and the eventual failure of Barings, he still blames a lack of oversight. The deference in the article at left shows that his ability to overcome the trauma is considered an achievement, but it really testifies to the incredible, colossal delusionary psychology of the great mania. The book offers tips to “people who feel overwhelmed by life’s difficulties,” particularly those “struggling with debt.” This is the perfect moment for Leeson to surface because the economy itself now rests on the types of leveraged positions discussed in Conquer the Crash. One wonders if the subprime wreckage buyers that we talked about here on Friday are Leeson readers. If they are, they are certainly putting Leeson’s strategies to the supreme test today as one of the largest subprime lenders, New Century Financial Corp. failed to open. New Century was already down more than 95% from 2004 peak and fell by another 50% in pre-market trading. Nick Leeson is the patron saint of doubling down on a leveraged bet and then doing everything in one’s power to obfuscate the reality and pin the blame elsewhere. Last week, we also covered the self-help movement’s last hurrah. Leeson’s re-emergence could be the pin that pops that bubble, too. |
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