…Nick Leeson wasn’t the first rogue trader in history and, despite the controls put in place after he’d brought down Barings, he wasn’t the last. Not six months after Leeson was caught, a trader in Daiwa Bank’s New York office confessed to over ten years of unauthorised dealing activity, leading to losses of over $1 billion. The following year, a trader in London, who tried to corner the copper market, was found to have lost his firm $2.6 billion. In the years that followed there were many more: Joseph Jett, John Rusnak, Jérôme Kerviel, Kweku Adoboli, Bruno Iksil (the “London Whale”). Between 1995 and 2012, rogue traders were led away in handcuffs at a rate of one every year or two. …
More here – Net Interest
I’ve always had my doubts about the Barings fiasco. I can never think of a good reason that no one in management didn’t question why Barings had so much money paid into margin call accounts. The only answer I can come up with is that they knew all about it and were trying to recover along with Leeson but he was the fall guy if they didn’t
All banks and broking firms maintain error accounts for both client orders and prop trading. What Barings would have initially seen is only the variation margin from Leesons trading – these losses would have initially been quite small until one day they weren’t . Thats what would have triggered their internal safeguards. If you know your way around the system is is quite easy to hide things in error accounts.