Rogue banking

15th September 2011, Comments 0 comments

Swiss banking giant UBS said Thursday that it has uncovered unauthorised trading in its investment bank which has led to an estimated loss of $2 billion (1.46 billion euros).

Police in London arrested a 31-year-old man alleged to have engaged in the rogue trade.

Some earlier examples of banking fraud or bad management:

- Nick Leeson and Barings Bank

In early 1995 the venerable British merchant bank Barings admits that the actions of a single trader have cost it some one billion pounds ($1.5 billion at the time).

Nick Leeson, a 28-year-old Briton working for the bank in Singapore is revealed as the source of the losses, which drive Barings to insolvency.

Leeson spends three and a half years in jail in Singapore, which does not prevent him from publishing an autobiography called "Rogue Trader," later made into a film.

- Daiwa Bank

In September 1995 Japan's Daiwa Bank says that an employee has concealed $1.1 billion in losses from unauthorized bond trading.

Toshihide Iguchi, a former vice president of the New York branch of the Japanese bank, is sentenced to four years in prison and a fine of two million dollars.

- Sumitomo copper trading scandal

In 1998 Yasuo Hamanaka, a metals trader working for Sumitomo Corporation of Japan, is sentenced to eight years in jail for unauthorised trading which costs the institution $2.6 billion.

- John Rusnak and AIB

In 2002 John Rusnak, a trader employed by Allied Irish Bank, is jailed for seven and a half years by a US court for losing the company $750 million through unauthorised currency trading.

- Societe Generale

In January 2008, the French bank Societe Generale admits that a single trader, Jerome Kerviel, has carried out unauthorised transactions that cost it 4.9 billion euros. Kerviel is sentenced to five years in prison with two years suspended and ordered to pay back the losses. The bank says it will not seek to make him pay the full compensation.

© 2011 AFP

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