Customer Reviews

Rogue Trader: How I Brought Down Barings Bank and Shook the Financial World

5 star:		(4)
4 star:		(7)
3 star:		(3)
2 star:		(2)
1 star:		(1)

 

 

The author appears to be one of the most character-challenged individuals of all-time, a major piece of work. By accumulating incredible unauthorized trading losses of around one billion dollars, he single-handedly brought down one of the oldest banking institutions in England, and left countless people without jobs and investments worth millions. What is absolutely amazing is the fact that while he never denies the fraud he committed, throughout the book he seems intent on blaming his superiors for their inability to discover his losses. While it is true that his superiors were so enamored of the fictitious gains his unit was reporting that they didn't want to ask hard questions, it is Mr. Leeson who is responsible for the wreckage. He never expresses any remorse whatsoever for the damage he inflicted. He was greatly perturbed because he couldn't serve his prison sentence in England, instead being returned to Singapore.

Without the proper education or pedigree, Leeson somehow managed to be promoted from a settlement clerk to running the Barings Singapore futures operation. Apparently his idea of having fun is to get plastered and moon some flight attendants in a bar, for which he was arrested by the Singapore authorities. Certainly he knew how strict laws are in Singapore, and he could have served a year in jail. It seems back in England, he hung out at pubs with friends who would unzip their pants and place their private members in the hands of unsuspecting females.

The book is of some interest to traders, because Leeson commits every cardinal sin in trading. He had no business ever setting foot near a trading floor. His biggest error was his complete inability to cut his losses, the most fundamental requirement for successful trading. He averages down or "doubles up" his positions when they are moving against him, another critical mistake. He constantly "hopes" the market will move back in his direction, and attempts to move the entire market by taking huge positions. While it is possible to move a market temporarily if one is trading large enough positions, the market will always continue on its established trend. The author continually engages in this futile strategy, at one point losing 60 million dollars in one day trying to change the direction of the market.

Finally, the book is not a terribly interesting read, in that a significant portion of it is repetitious detailing of how he conceals his mounting losses to his superiors through the use of "creative accounting". Perhaps that is why the book is now out of print. The one thing that he does care about is his wife, who at the time of publication of the book was still standing by him. If she has any good sense, she would drop him like a bad habit.

Somehow Nick Leeson ended up with the reputation as some kind of whiz kid but reading this book you get a different sense. The derivatives Mr. Leeson was trading do not seem particularly sophisticated (don't compare this to LTCM). But you wouldn't learn much about them from this book. I got the sense that Mr. Leeson was grappling with very basic financial questions. As a consequence, the book tends to be repetitive in a description of losses getting out of control and the soap opera building around that. You also have a nagging feeling that you never get the full story. However, the book is interesting where it describes the complete breakdown of financial and management controls.

I guess, in order to create some overarching conflict, and keep the story from looking like one long apology, Leeson had to dwell on the issue of management controls. This, however, would only seem a sound line of inquiry if he could actually prove the controls would have any value, absent his own activities (and questionable character).

An organization as (historically) successful as Barings had been, particularly in an industry as competitive as merchant banking, will dispense a significant amount of discretion to mid-level managers in-order to facilitate innovation and risk-taking, two activities paramount to success in merchant-banking.

Therefore, Leeson can't possibly have been alone in enjoying his level of localized discretion, at that or any other time in Barings' history, though HE ALONE misused it to such catastrophic results. Perhaps, then, the question is not should we check better on our employees' actions, but should we even hire employees that we aren't 100% sure could effectively utilize our level of discretion?

While Leeson apparently acted in order to retain his leadership position, he effectively revealed his inability to lead by:

1) Creating a culture, within his office, of sloppiness and irresponsibility. (By allowing employees to utilize the 88888 account, rather than condition them, either by reprimand or more aggressive training, against making so many mistakes.)

2) Mistaking his superiors' TRUST of his own abilities for "aloofness," and thereby failing to properly utilize (rather than ABUSE) that trust.

3) Never, ever, ever owning up to his mistakes, or actually devising long-term solutions to his problems (like, say, never using the 88888 account after the first two times he cleared the balances, or simply not putting his OWN trading errors in the account.) ------ All this having been said, however, Leeson's account of his activities, and his flare for storytelling (or his co-author's, duh) make this a sufficiently enjoyable read.

Aspiring traders in particular should probably read this story just in order to get a grasp of some trading concepts, as well as a general account of life as a trader (albeit a dishonest and irrational one such as Leeson).

Nick is a young normal intelligent guy that gets caught up in a web of deciept that he created. One should not feel sorry for him, for as this book explains he had the starring role in this play. His insights into what it like to be the star in a real life play that has a Shakespearean ending is interesting reading.

A probably slightly biased book seeing as it is about Nick Leeson and is written by Nick Leeson.

Someone who works for Leeson makes a costly mistake and this, we're led to believe, is the catalyst for the downfall of one of the world's oldest banks. Leeson, we're told, gets sucked into making bigger and bigger gambles with derivatives, a still not very well undertood part of the financial sector and, of course, the rest we know.

Leeson comes over as greedy, as do his superiors at Barings. As long as he was claiming to make money, they were fine with whatever he was doing, not that they knew what he was doing.

A very interesting yet somewhat flawed book.

Very interesting, especially his attempts to right the wrongs, however he does a lot of justifying because superiors were not paying attention. . . you may also enjoy 'The Ugly Americans' by Ben Mezrich

I watched the movie but it lacked the technical insights which allow us to understand in a detailed way how he could hide such loss. The book gives plenty of first hand technical insights. The style also makes it readable within a couple hours.

Rogue Trader is an interesting tale of one man's rise and fall in the fast-paced world of derivatives trading. A reader would likely need to possess an interest in business/derivatives to fully appreciate the nuts and bolts of the story. I remember Leeson needing for the Nikkei to finish at 19,000 or better for all of the options he had been selling to pay off. Would these be puts or calls? Anyone reading this review, of course, knows the answer, but I can imagine this being very dull and tedious to one with no interest in such matters. Leeson does give us an adequate explanation of the mechanics involved.

Yes, the book is a bit self-serving and bitter at times. The biting sarcasm is absolutely appropriate and probably well-deserved whomever the targets may be.

What I came away with after reading this book was that we too often assume people know more than they really do especially in the world of finance. For all of the big salaries and egos there at Barings Bank, management's financial acumen was no match for an unsupervised trading operation and systemic laziness within the bank both of which combined to bring the old merchant bank to a shameful and totally unnecessary end.

I must take my hat off to this book and it's authors. This is a must read for anyone interested in the story behind the collapse of Barings Bank. Is it self serving? Probably. Is it one sided? Probably. Who cares! I was swept away from page one, and finished the book in a couple days....it read exactly like a great adventure/intrigue/spy novel....I couldn't wait to see what happened next. I would strongly advise reading this book, and have fun!

A fast paced book, that could be mistaken for a spy novel. I found this book hard to put down, and as a younger reader I found the book very insightful, for the aspring Investment Banker.