Rogue Trader
Lam Tran
BBUS 435 – Accounting Information System
Rogue Trader COSO Control Violations Short Essay
The movie, Rogue Trader, narrates the true story of a man named Nick Leeson. He brought the Barings Bank down, which was one of the most venerable financial institutions in England. Nick Leeson was played by the actor Ewan McGregor, who started working in Indonesia for Barings Bank. He then became a trader on the floor of Singapore International Monetary Exchange. Nick’s responsibility was to trade futures and options on behalf of the bank’s clients. As the movie progresses, Nick encountered a trading error and experienced a relatively small loss, so he tried to rectify it by trading futures under his own account. However, the trades he made only exacerbated the problem. As Nick’s losses increased, he was still optimistic about being able to trade out of them. Hence, he bought more futures contract to actually move the market in his favor. The market continued to move against Nick and the amount of losses jumped to hundreds of millions dollars. At that time, his superiors were still oblivious about what was going on. When the management at Barings bank started to figure out what happened, Nick and his wife tried to escape Singapore. However, he was arrested and sentenced to six-and-a-half years imprisonment in Singapore for unlawful trading and forgery. In my perspective, I think the two components of the COSO framework that were most violated in the movie were (1) control environment, and (2) risk assessment.
First, the lack of management supervision encouraged Nick to defraud Barings. Since Nick generated a huge sum of profit for the bank, senior managers of the bank were happy to remain blissfully ignorant of what he was doing, as long as he continued to make mega-profits. When Nick asked for more funding, he was still able to get it even though the laws forbidding the transfer of more than 25 percent of a bank’s share capital out of the country. Even after Nick
BBUS 435 – Accounting Information System
Rogue Trader COSO Control Violations Short Essay
The movie, Rogue Trader, narrates the true story of a man named Nick Leeson. He brought the Barings Bank down, which was one of the most venerable financial institutions in England. Nick Leeson was played by the actor Ewan McGregor, who started working in Indonesia for Barings Bank. He then became a trader on the floor of Singapore International Monetary Exchange. Nick’s responsibility was to trade futures and options on behalf of the bank’s clients. As the movie progresses, Nick encountered a trading error and experienced a relatively small loss, so he tried to rectify it by trading futures under his own account. However, the trades he made only exacerbated the problem. As Nick’s losses increased, he was still optimistic about being able to trade out of them. Hence, he bought more futures contract to actually move the market in his favor. The market continued to move against Nick and the amount of losses jumped to hundreds of millions dollars. At that time, his superiors were still oblivious about what was going on. When the management at Barings bank started to figure out what happened, Nick and his wife tried to escape Singapore. However, he was arrested and sentenced to six-and-a-half years imprisonment in Singapore for unlawful trading and forgery. In my perspective, I think the two components of the COSO framework that were most violated in the movie were (1) control environment, and (2) risk assessment.
First, the lack of management supervision encouraged Nick to defraud Barings. Since Nick generated a huge sum of profit for the bank, senior managers of the bank were happy to remain blissfully ignorant of what he was doing, as long as he continued to make mega-profits. When Nick asked for more funding, he was still able to get it even though the laws forbidding the transfer of more than 25 percent of a bank’s share capital out of the country. Even after Nick