Rogue Traders
In the four scandals of the ‘rogue traders’ and their respective banks, factors leading to the incidents are similar.
In the Barings Bank and Nick Leeson scandal, we see a high management person who rose up to a position after building up on his reputation. Being transferred to the securities department after being promoted to general manager, the lack of experience trader along with a group of trading professionals were teamed to garner for smaller profits. Instead of fulfilling his role and work towards the objective of the team, Leeson moved toward speculating instead. In this case we can see the lack of supervision on the part of Barrings Bank where no one can monitor their movements. This prompted Leeson to act with fraud using the bank’s monies. For a period of two years, Leeson manage to hide the loss from the eyes of the bank and has consistently acted in a detrimental way to the bank’s financial position. Suspicion was averted from senior management with the use of a separate account that has covered up his mistakes.
In the Societe Generale and Jerome Kerviel scandal, it is a simple matter of fraud and abuse of authority. On the part of the bank, they have failed as they lacked control over the actions that has put the existence of the bank at peril. There was an abuse of trust in Jerome which has partially made the Bank liable for these own losses. It is also a surprise that in the trial for the conviction of Jerome Kerviel that the Bank escaped with a mediocre fine of $4 million. The bank was absolved of all responsibility with the blame entirely falling on the shoulders of the low level bank employee. There were also allegations that the bank superiors knew what was going on but turned a blind eye as it was making profits.
In the UBS and Kweki Adoboli scandal, there were similar mistakes where the Bank lacked stringent controls systems and supervision. UBS was found to have had serious weakness in its internal controls of its investment banking
In the Barings Bank and Nick Leeson scandal, we see a high management person who rose up to a position after building up on his reputation. Being transferred to the securities department after being promoted to general manager, the lack of experience trader along with a group of trading professionals were teamed to garner for smaller profits. Instead of fulfilling his role and work towards the objective of the team, Leeson moved toward speculating instead. In this case we can see the lack of supervision on the part of Barrings Bank where no one can monitor their movements. This prompted Leeson to act with fraud using the bank’s monies. For a period of two years, Leeson manage to hide the loss from the eyes of the bank and has consistently acted in a detrimental way to the bank’s financial position. Suspicion was averted from senior management with the use of a separate account that has covered up his mistakes.
In the Societe Generale and Jerome Kerviel scandal, it is a simple matter of fraud and abuse of authority. On the part of the bank, they have failed as they lacked control over the actions that has put the existence of the bank at peril. There was an abuse of trust in Jerome which has partially made the Bank liable for these own losses. It is also a surprise that in the trial for the conviction of Jerome Kerviel that the Bank escaped with a mediocre fine of $4 million. The bank was absolved of all responsibility with the blame entirely falling on the shoulders of the low level bank employee. There were also allegations that the bank superiors knew what was going on but turned a blind eye as it was making profits.
In the UBS and Kweki Adoboli scandal, there were similar mistakes where the Bank lacked stringent controls systems and supervision. UBS was found to have had serious weakness in its internal controls of its investment banking