On December 2, 1995, a young financial prodigy responsible for the downfall of one of the UK’s oldest merchant banks was sentenced to prison.
Nick Leeson, a 28-year-old trader originally from the UK, engaged in fraudulent and unauthorized trading while working at Barings Bank’s Singapore office.
His risky financial maneuvers led to a staggering $1.3 billion USD ($2 billion) loss in bond derivatives, ultimately bankrupting Barings.
Leeson had gambled on a rise in the Japanese stock market, a bet that turned disastrous.
Following the catastrophic Kobe earthquake in January 1995, the market plummeted, prompting Leeson to double down in a desperate attempt to recover his losses.
He concealed every financial setback within a secret “error account,” ensuring his office appeared profitable despite the mounting debts.
Leeson’s losses mounted so he turned to other sources of money to continue trading.
This resulted in some of Singapore’s major financial companies releasing funds to Barings.
But his bosses at Barings began to investigate the staggering losses as its cash reserves quickly shrank.
Their actions came too late to save the bank, founded in 1762, and whose clients included the British royal family.
Realising his giant financial scam was over, Leeson fled Singapore with his then-wife to Kuala Lumpur, triggering a global manhunt.
He resurfaced days later and was arrested in the German city of Frankfurt before being deported to Singapore.
Leeson, known as the “Rogue Trader”, was given a jail term of six-and-a-half years in Singapore for illegally concealing trading losses and served four years of his sentence.
On his release, he breakfasted on champagne and smoke salmon while flying back to London in the company of British reporters.
Leeson later signed a lucrative book deal.
The film Rogue Trader, starring Ewan McGregor, was based on his exploits, from which he received a share of the $14 million profits.
Speaking with CNN in 2013, Leeson said he never got to spend any of the money.
Barings’ liquidators had served Leeson with an injunction of £100 million ($200 million) and took 50 per cent of the proceeds from his story.
“I asked them ‘if I got a job flipping burgers, how much would you want?’ and they told me “half’,” he said.
