Are Financial Markets’ Trading Scandals Inevitable?

Are Trading Scandals Inevitable?

Are Trading Scandals Inevitable?

In 1995, Nick Leeson, a trader for the world’s second oldest merchant bank, Baring’s Bank, brought about the collapse of the 230-year-old financial institution by engaging in highly speculative derivatives trades that cost the bank $1.3 billion in losses. The crash, deemed the granddaddy of trader misconduct at the time, was hardly an isolated event but rather a harbinger of greater trading scandals to come. In the twenty-one years since Mr. Leeson’s notorious trading fiasco, six other major trading scandals have been prosecuted with defendants being convicted either by plea bargains or trial. The $14 billion in losses over the past two decades ranged from a “paltry” $456 million to a whopping $7.2 billion. All of which, of course, raises the question: are trading scandals part and parcel of the financial markets game?

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