I’m Nick Leeson, today is my birthday. It is also 25 years ago today since I broke the UK’s oldest merchant bank with illegal losing trades of over 1.4 billion dollars and the phrase, ‘Rogue Trader’ was coined.

How do you feel about Games Workshop using the phrase Rogue Trader with their 1st edition of Warhammer 40,000?

Still looking for the naming rights to be paid out-only kidding

Do you know that you can find your people at r/wallstreetbets ?

We might try that next time

This was my immediate first reaction when I read the title. 25 years ago? That phrase was used in sci-fi 33 years ago!!

Obe Wan Kenobi may have playedme in the moviebut mysci-fi knowledge is zero

Nick,

As a compliance office for a large retail and wholesale bank I wanted to say that I found your book an absolutely fantastic read and it helped to shape my career.

What do you think is the biggest risk that financial institutions face today and in your view, does regulation go far enough or will people always find a way around it?

Hope you are well, and happy birthday.

I think compliance is too onerous atthe moment.

Part of the role should be to challenge, if there aretoo many reports to fill in , it detracts from being able to challenge

What is prison in Singapore like?

Tough, locked up 23 hours a day, sleep on the floor, everyone is a triad gang member

So your a triad gang member?

Neat.

never had to join up but had my pick

Did you at least get a Triad prison tattoo?

No, I have one tattoo though, a football team, MCFC

How do you feel about their potential ban from the Champions League?

Hoping they get it reduced somehow

If they dont,so be it,might beback at Rotherham away in a few years

Craziest story that comes to mind?

the crazy stuff that the locals would smuggle out from theworkshops

Tippex to get high

Needles to sew their clothes

All smuggled secreted in their bum - not good

What was your motive?

No motive as such

I couldnt cope with failing and in not doing so got buried deeper and deeper into a tissue of lies.

The plan (motive) was to try and turn it around and start my life again

Ahh I see. In hindsight, what do you think that you could've done differently back then that would have changed the outcome?

Put my hand up at the beginning andask for help/direction

Seems like we need more compliance, not less, per this comment.

quality not quantity

Hi Nick, old Parmiters alum here. Saw you in the Viking chippy on St Alban's road a while back. I think you bought the Wayne special kebab. My mate is the actual Wayne who invented it. How was it?

Long time back, cant think I've been there in the best part of 17 years

Please continue to post questions, but i'm going to bed shortly, long day since 6am. I'll be back tomorrow and answer some more.

cheers,

Nick

So, how many people lost their life savings so you could have a little fun?

Not sure that any did in the end. Barings was an investment or merchant bank, the typical transactions were with other financial organisations. the products were mainly exchange traded and therefore guaranteed /insured

I met one of the bondholders in Luxemburg 10 years after the collapse and he had been paid out

​

That doesnt excuse my guilt

So you only spent money from the 1% of the population. Their money was fully guaranteed that a faulty investment would be repaid? Where does guaranteed money come from? Is it circular investing?

All of the members of the exchange postbonds, guarantees

Insurance losses result in higher premiums. Higher costs result in higher prices. I don’t doubt the ordinary person in the street paid for your crime.

Not insurance per se, broker guarantees at the exchanges

Bit like these huge fines handed out to banks, where do they go

Even the provisional conclusions of the report are interesting. I should like to give them to the House so that we may be reminded what the supervisory body itself decided at the end of such investigation as it was able to make. It stated on page 250:

"Barings' collapse was due to the unauthorised and ultimately catastrophic activities of, it appears, one individual (Leeson) that went undetected as a consequence of a failure of management and other internal controls of the most basic kind".

The words I venture to emphasise to your Lordships are these:

"as a consequence of a failure of management and other internal controls of the most basic kind".

-Lord Bruce of Donington, in the House of Lords' debate on the Barings report

The only way anyone lost their life savings is if they had put it all into uninsured, unsecured investments through Barings. That is to say, not random stocks or bonds, but specific investments based on the trading that Barings does. Which would again be a failure "of the most basic kind".

Agreed, the BOBS report wasntthe best either though, rushed,based on half of the documentation and a lot of people covering their backside

Interested to hear his response, but I don't think Nick Leeson nor any of the more recent rogue traders did their bits for fun; I think it's driven more by egos seeking to find an edge on the competition, then feeling that sunken feeling on realising they are in a big hole. Then, as they try to dig their ways out, they find they are only digging deeper.

A cut-throat winner-takes-all and survival of the fittest culture in banking probably lays the foundations for this. Any industry that attracts people mainly for the lucrative earnings is probably going to attract rule breakers and risk takers, right?

A certain amount, 99% of people follow the rules

Systems, controls and good supervision are required to keep the others in check.

Where there are gaps a few people will drive through, either intentionally or by mistake

How many people lost their careers as well?

Everyone who worked for me in Singapore lost their jobs - they were all re-employed fairly quickly

5 senior managers/directors were fired

Everyone else was employed by ING who bought the bank

Of those, 2000 people roughly, I was told recently 1 remains

Anyone who has done something as serious as what you had done would have totally dodged that question or become defensive. I really respect that you are owning up to what you did without feeding everyone a load of bull.

Also, happy birthday, it's my brothers birthday as well today.

Only through being honest andfully accountable for your actions, can you move on

I could BS may way through anything but you still have to look at yourself in the mirror

That's not quite true. After ING bought Barings, there were redundancies. I camped in Balls Brothers down the road (I was a headhunter) and funnelled them all over into Merrils, Sollies etc..., my customers.

Made me some good, pocket change.

I also met a guy in the UK who claimed he was your settlements clerk. Don't know if that was true. Always been curious. Not tall, in his mid-to-late 20s, dark hair. Cheap suit. Always been curious if he had anything to do with you. Did he?

you have more direct knowledge than me. I would imagine that there were desks etc that couldnt migrate

Any idea what that 1 person does?

No, I was at an event in Amsterdam and oneof the journalistshad completed that piece of research!!!

You mentioned that you're now trading again. How is that possible ?

No restrictions and nobody can tell me what to do with my own money

I am curios but I don't understand this part -

> It is also 25 years ago today since I broke the UK’s oldest merchant bank with illegal losing trades of over 1.4 billion dollars and the phrase, ‘Rogue Trader’ was coined.

What exactly did you do ? What made it illegal ? What happened to the money ?

I took unauthorised trades and concealed them in an illegal account - 88888

In theory, if this worked out. Would you have gotten away without repercussions?

Add in- rotten luck that made you “the guy”? I’d assume lots of people in finance do shady things, like most industries.

If you make your business hundreds of millions you can get away with fucking your bosses wife.

Interesting.

So you're telling me I can gamble with the companies money, and if I'm good enough at it I could bang the bosses wife? I think I'm in the wrong profession.

No, he’s telling you that if you bang your boss’s wife you better make the company a hundred millions.

good explanation

What was the most unexpected thing thatchappened to you from this?

Speaking at a dinner with Mikahil Gorbachov

Dang that’s super cool did you actually talk with him?

Had dinner with him and his wife after at harewood house

Crashing Barings was pretty big, but Gorby went bigger and crashed the Soviet Union...

For the better good

Appearing on Celebrity Big Brother in 2018

What if your name were changed to Lick Neeson?

Would you feel closer to Liam Nielsen?

Let me think about that

OK. While you do: Can one truly divorce their former selves?

No, we are the sum of all our experiences, good and bad

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You've watched the movie as much as me.

Certain things are dumbed down, others are over dramatised

I was still in prison when it was released

Obi wan had given up by thetime he got to Frankfurt, the only thing I had to worry about was a T shirt inmy luggage of Geoff Hurst scoring in the WorldCup final and the scoreline 4-2 -I was in Frankfurt

Markets I think are over reacting but my understanding of the coronavirus islimited so just looking to job in and out of the market - quickly

So, Mr. Leeson, what would you say are the lessons you have learned from your experiences and how are you applying that wisdom to your work now?

Being able to communicate and ask for help was probably the most important lesson learnt

We all face situations we cant immediately cope with and are surrounded by people who can help but you just need to ask

​

We all like to think we can cope with anything

I’m a compliance officer for a large bank with a lot of trading activity. What should be our top priority to prevent the next rogue traders? The basic stuff like front/back office segregations, reconciliation controls, etc are already in place (we did learn from previous rogue trader cases).

You always need to be pro active,monitoring, challenging, asking the difficult questions

What made you start trading in the first place and what moves you now to keep trading even after all that happened? What's the motivation?

You have to learn from your mistakes, I'vemade all the mistakes, so shouldnt do it again

Trading is a bug, its exciting, no two days are the same and you are pitting your wits directly against other people, i enjoy it

​

Its not foreveryone though

Why would people trust you to trade again?

I'm not looking for you to invest

Best way to learn is by doing

You can trade with me or against me, the choice is yours

So are you trading just with your own money then? Or do you work for a company? Or on behalf of investors? I'm not familiar with the investment world so not sure how it all works.

I'm amazed there aren't laws to prevent convicted fraudsters going back to do it all over again!

None what so everwith your own money.

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Exactly, I was neither at the time

This may be the wrong place to ask this, or more expansive than is appropriate here. What goes into risk management? Is this like, highly conservative financial guys vs the we’ll make money on everything guys?

[deleted]

Good explanation

Do you think regulators will ever design protocols that impede/remove incentives for risk takers to bet the house on ever more crazy trades, or is it just something that we must come to expect and control for?

Or is banking now so full of compliance that such behaviour is basically such a pain in the ass that no-one can get away with it anymore?

Banking is far safer than it was

The first line of defense on the trading desks should work

Systems, controls and people are farbetter than they were 25 years ago

My colleagues and did a bit of study on you after the scandal broke, due to professional interest in trading frauds. We were puzzled a bit by the reporting, in that it was claimed that you concealed your losses by selling options, and thus generating "phantom profits". This seemed impossible, inasmuch as any cash generated by selling options should have simultaneously generated offsetting liabilities -- equal at the time, but escalating as the market moved against you.

So, how were you able to separate the cash from the liabilities? Was that a sloppy accounting feature that you recognized and were able to exploit, or was their some mechanism that you were able to set up to achieve it?

When SIMEX introduced options, early 1993, they made a stupendous error.

If you sold an option you received 100% of the premium

So for 2.5 years I was swapping a P+L item for a balance sheet item, the margin we had to post at the exchange

Nobody interrogated the balance sheet

The only check was the account balance line - loss in 88888 account offset by option premium received

Balance sheet agreed, loan from london = margin at exchange

BUT WHAT ABOUT LIABILITY

Thanks so much for that confirmation, after all these years. That's pretty much what we concluded from the reporting, but nobody seemed to really state it explicitly, and it was pretty boggling. We actually were involved in litigating some similar, less earthshaking "exploited screw-up" frauds before and after yours. One wonders how many more might be out there to be discovered. ;)

Have you ever heard it rumored that someone else might have been benefiting from the same error, and just got upstaged by your downfall?

Possibly, the liquidators looked at it for years, found a couple of people who made 20M + over the period, was asked if these numbers were unusual forthe people concerned,my answer was no

I started my career when your trades began, we found several US based broker dealers with lax internal controls regarding posting and custody of assets. It’s pretty simple fraud, so I don’t really buy the banks defenses. They simply didn’t think it was important.

their controls were non existent

Are you saying no one accounted for the notional value of a short option position in their books? Wow man. That's fucking crazy. I know the 90s were a long fucking time ago but weren't option strategies already being used in the market? Sitting in 2020, this seems like an unbelievable oversight. You could basically load up on otm puts without compliance issues. I need to read your case tbh.

While I have you, can I also ask opinions about the London Whale trader / LIBOR manipulators / currency trader manipulations etc? Are any elements of those case particularly interesting to you as a financial con game?

Dont really have any fascination with them,dealing with my own shit is tough enough

Dear Mr. Leeson. A question from Argentina, how would you judge the role of control agencies in your case and in subsequent economic crises? and the British government?

Rubbish,

Basic rules were broken

A bank can lend 20 % of its capital to a subsidiary

Barings capital base was circa £250M, by theend of 1994 I had £600M with me in Singapore

The bank of England was theregulator at the time

I read on Wikipedia that you initially made £10m profit for Barings on your illicit speculative trading but only got a bonus of £130k. With not much upside, and as you found out an enormous downside, what motivated you to make the trades? Did you not understand the risks?

The whole period is me postponing the realisation of the losses which in turn was postponing the realisationofmy own failure

Hello Nick Leeson,

Happy Birthday!

How are you?

I can't believe you are doing an AMA, I have a barge of questions to ask you :)

*How do you feel being infamous in the world of finance and having a term coined after you?

*My professor in RMIT Malick Sy said he gave you an exam in Singapore in order for you to become a trader or something I can't remember the exact details, but does that name ring a bell?

*How faithful was the movie "Rogue Trader" in your eyes? What were your biggest annoyances and favorite thing about the movie?

*Was Ewan McGregor who you wanted to portray you? If not who would have you wanted? (I am an Ewan Mcgregor Fan, watch out)

*What was your thought process when you made those trades when the earthquake hit Japan?

*George Soros or Warren Buffet?

Thank you

too many questions

Warren Buffet is more traditional, The Quantum fund used to be a client of Barings, its

rumoured that Soros was turned down for a job at Barings so they missed out on Soros and got Leeson!!!!!

Thank you for the reply.

TBH, I wasn't expecting the AMA to be this active, that's why I asked a lot and it seems the movie questions have been asked to death.

Hey, at least Barings got a Legend!!!!

For me the most important questions is do you a person named "Malick Sy"?

Cant say I immediately remember him

6 and ½ years in a Triad led prison in Singapore

Can you tell us more about this experience?

Its tough

Cellsare 6ft by 9ft, three to a cell

small toilet in the corner which is a hole in the floor

dont get water every day, allowed three books a month

Spent a month in a punishment cell

TOUGH, TOUGH, TOUGH

Spent a month in a punishment cell

What for? Also why were you tired in Singapore?

Not Nick, but the crime was committed in Singapore, on the Singapore Stock Exchange

Serious Fraud Office in the UK decided Singapore was the correct place for the trial

How was the prison food in Singapore? And were you ever caned?

Never caned

Food was appalling most of the time, went vegetarian for 6 months because it was better

As a westerner, it was very difficult to eat rice twice a day

Hello Nick, happy birthday! Trading is exciting and thrilling for many people. Are you a thrill seeker outside trading?

Not really, bit of a scaredy cat

trading is also monotonous and dull at times. it's not all "wolf of wall street".

Can thats when you need to be most disciplined

One usually doesn't go straight to illegal trading. What other illegal things have you done that were less well-known?

WOW, grew up on a council estate in Watford so was never a choir boy

Would have been as creative with my expenses asthe next man (or politician)

How does a boy from a council estate wind up in that role? How many of your co-workers were from such a working class background?

not too many

It was the Big Bang era when I started in the City - 1985

If that earthquake never happened, how much longer do you think you could have kept up the trades?

Barings was out of money

Hi Nick! Do you think it would ever be possible to do what you did again?

Also, hope you’re feeling better now

Well there's this guy: https://en.wikipedia.org/wiki/J%C3%A9r%C3%B4me_Kerviel

I keep him locked in the shed, he'll be out and about soon

What are your thoughts on cryptocurrency?

If the market hadn't moved against you and you had covered your losses, would you have been able to move all the money back around without arousing suspicion?

How common are these types of shady practises in financial circles?

Probably

Basically I'd been given £600M for a load of blatent BS that made no sense, giving back £650M would have been easy

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Trying to 'game' the market will never go away, everone is looking for an edge

HFT, algos, program trading movethe market far quicker and en masse than ever before

Hi Nick, I want to say that I have a lot of respect how you've dealt with your past. Do you ever wonder what both your life and your personality would be like if it hadn't blown up and you had gotten away with it?

No, you have to play with the cards you are dealt

Wishful thinking is the most negative thing you can do IMO

I remember watching 'Rogue Trader' in our business class at school maybe 10-15 years ago now. It was what really kick started my interest in the crazy world of investing. I know millions of people were affected negatively by your actions but if you were to re-live your entire life, would you do it all again?

No

Hello Mr Leeson,

I've only known of your exploits from the Ewan McGregor film so I'd like to ask:

Was the film accurate in your eyes?

With the way the bank crashed then and the 2008 financial crash do you think bankers are generally just reckless in a banking environment without any regard for the larger picture (i.e a banking institution and/or the system)?

Do you still retain any contacts from then on the present day or are you fully outcasted from that social circle?

Banks and bankers have always flouted the rules but were never really accountable to anyone, that breeds contempt but it is changing

Christmas card list dwindled a bit after the collapse

When will u rest?

Dont think I'm madeto slow down any time soon

Hey Nick,

Do you believe the same scale of a rouge trader could happen again even with the new tough regulations and could this be more or less likely with the introduction of more AI in big bank trading?

Also on a side note how are Galway's chances this season?

Thanks,

Wont happen again in a developed financial market.

Alan Murphy should do wellthis year

Looking back at it all how do you feel about what you did?

And what advice would you give to a beginner retail trader?

Get some good education, there are a lot of people out there pretending to be something they are not

Did you have any accomplices or others you told that you wanted to have join you in your “rogue trading”?

Just me

Should I buy puts on spce?

Too late

Hi Nick,

What were your thoughts on the movie, both how you were portrayed personally and how it covered or didn't cover the various aspects of the story?

And do you think you'd have been able to pull yourself out of the hole had the 1995 earthquake not happened?

I've answered a few questions on the movie

Position was too big by 1995, no way to unwind, barings was out of money, market was cottoning on so earthquake or not it was coming to an end

Is it too late to start trading at 30?

No,

Happy Birthday!!

Questions:

1. Are you more of a technical or fundamental trader?

2. What would you say your edge was over the rest of the other traders?

3. When did you start trading?

4. How did you fund account when you first started? Job, savings, inheritance?

5. Do you beleive the market has changed much in the last 25 years? If so, how?

6. If you do beleive in technical analysis, what tools would you say are the most useful?

1 Sentiment,I day trade

2 Seenit, done it, lot of spoofing still goes on and catching the trend is important

3 1987

4 Job

5 Changed a lot, HFT, algo,program AI

6 you need an edge, technical islargely thesame

Where did you learn about trading and where would you recommend a beginner starts?

www.bullandbearcap.com

I'll help as much as I can

You destroyed England’s oldest merchant bank and you have the cheek to do a AMA? Ur a fraud and a cheat.

and a criminal