The Fall of Barings Bank
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"I think it shows the financial markets world is a good deal less efficient than we believe. If we look at our bank statements, we can see computer errors, for example. And at the same time, there's negligence. A lot of people turned a Nelsonic blind eye to what he (Leeson) was doing because he seemed to be bringing in the profits." 1
- David Frost, Executive Producer, Rogue Trader.
"It could happen again because the incentives are the same, if not greater. The rewards are very great and that's a temptation for people." 2
- Neil Wilson, Editor of Futures and Options Week.
On February 26, 1995, Barings Bank (Barings) - the United Kingdom's (UK) oldest and one of its most reputed banks - declared it was bankrupt.
In spite of not having the authority, he traded in options and maintained un-hedged positions. He acted beyond the scope of his job, and was able to conceal his unauthorized derivatives trading activities.
1] 'Leeson scandal could happen again,' BBC Online Network, June 22, 1999. David Frost is the executive producer of the film 'Rogue Trader' based on Nick Leeson.
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