Rogue Trader is based on the story of Nick Leeson, the trader in charge of Barings Bank's Singapore operations in the mid-1990s. Leeson gained infamy after he lost $1.6 billion of the bank's money, forcing England's oldest merchant bank into liquidation. Leeson had been hiding his trading losses from the firm and was eventually sent to prison in Singapore for fraud.
Ewan McGregor turns in a fantastic performance as the terrified, brash gambler, and this is definitely compelling cinema. But for investors and followers of financial malfeasance, it's even more interesting.
Leeson's crimes and the failure of Barings Bank were made possible by extremely poor internal controls -- the same problems that led to the collapse of companies like Enron and Worldcom. In addition, a compensation structure that rewarded Leeson's risky gambling with the bank's money, even though it was illegal, was also a key contributor.
None of this is to remove the blame from Mr. Leeson, but the point is that a huge bank should not be able to collapse because of one unscrupulous gambler.
Rogue Trader is a fascinating look at the psychology of fraud -- a perfect example of the fraud diamond contributing to a corporate failure: Incentive, opportunity, capability, and rationalization. Leeson convinced himself that he was working for the bonuses of his coworkers.
The mechanics of the fraud will be a bit difficult to understand watching the movie. Even if you have a decent understanding of futures markets, the action is very fast-paced. But you don't need to understand the mechanics of the crime to enjoy this movie and learn a good deal about the psychology of white-collar crime.
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Reader Comments (Page 1 of 1)
11-23-2007 @ 11:48PM
Bradly said...
rogue Traders rulez
11-24-2007 @ 12:27PM
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11-24-2007 @ 12:29PM
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