Trader recommends Regulation that is intelligent

In the highly successful and informative RSA Europe 2009, a rogue trader who had been in the business of bankrupting banks before it became popular—Nick Leeson—stated to delegates that further monetary dilemmas (like the Barings Bank collapse he masterminded) will inevitably happen in the future unless the present quality of banking regulation improves.

Leeson alleges at the Thursday stretch of the European security conference that nearly nothing has changed in the last fourteen years since he first caused losses in excess of eight hundred twenty-seven million pounds (one billion three hundred million dollars) and the financial ruin of the Barings Bank in 1995.

He stated to journalists that improving scam management systems with suitable knowledge-based regulations is the only way to expose financial fraud similar to the one he undertook for three years at Barings.

Leeson emphasized that better regulation quality—not stricter or more lax directives—was needed in order to ensure the safeness of financial institutions everywhere against cavalier traders like himself.

25 year old mange rigged market in Singapore 1992

When Leeson was just an overambitious twenty-five-year-old young man, he went to Singapore in 1992 and founded a business in derivatives and futures market for Barings.

Despite his initial successes, Leeson was soon forced to disguise his losses into an error account named 88888 because of how staggering and numerous these deficits were.

He concealed his negative cash flow by getting an overdraft, so daily funds from London kept the bank buoyant while the overdraft and losses piled up.

It was only after other banks started calling in his liabilities that the whole state of affairs went down the drain.

For three years straight, Leeson was able to stave off investigations from the treasury, compliance, and risk management departments at Barings by telling many different sets of lies to each division that depended quite a lot on his own skills and intelligences as a con artist as well as their lack of knowledge about derivatives trading to delay the unavoidable fallout. Leeson was able to continue with his ruse because of the general ignorance of the Barings board—i.e., the human element which financial security systems are forever helpless against.

The people who investigated him had no comprehension of the deals he was making, which left them in the dark during most of his scamming tenure.