November 3

Rogue Trading: 25 Things You Should Know

Last Updated on 3 November, 2022 by Samuelsson

Rogue trading can be defined as a type of securities fraud that involves the deliberate misrepresentation of information to generate profits. This can include activities like insider trading, market manipulation, and front-running. In this blog post, we will discuss what rogue trading is, the different types that exist, and some of the penalties that can be associated with it. We will also provide some tips on how to avoid becoming a victim of this type of fraud.

1. What is meant by rogue trading?

Rogue trading can be described as the behavior of retail or institutional investors who trade in a manner that is different from what they intended to. For example, a person can intend to purchase shares of a company but their order can get changed or canceled by the broker. The idea behind this is that they will buy shares at a low price and sell it after the market has moved higher. The transactions associated with this type of activity are not officially reported and are considered to be illegal. It is a type of securities fraud that involves the deliberate misrepresentation of information to generate profits. This can include activities like insider trading, market manipulation, and front-running.

2. Is rogue trading a crime?

Yes, in the United States and Canada, rogue trading is considered a criminal act. The laws that govern this activity are the same as those governing other types of securities fraud such as insider trading and market manipulation. What makes it distinct from these crimes is that it is directly committed by retail investors or institutions instead of professional investors or firms. This kind of trading can lead to large fines and penalties, including prison time. Additionally, all of this illegal activity is done in secret and never reported to anyone.

3. What happened to the rogue trader?

There are different types of rogue trading. One is the “fat finger error,” which occurs when a trader accidentally enters an order that is greater than what they intended to buy or sell. Another kind of rogue trading is called “trade jumping”. This involves the changing or cancellation of orders without the knowledge of the trader. A rogue trader can go into hiding after doing this kind of activity and can avoid detection for at least a few months. It is worth noting that the rogue trader can be a person or an institution. In September 2013, Hayes, a London-based trader, was fined around $1.3 million for insider trading. In this case, he was convicted of front-running trades with knowledge of the fact that they would happen.

4. Who are the worst rogue traders in history?

According to a report conducted jointly by two law firms, Keker & Van Nest LLP and Siskinds LLP, in 2011, the so-called “London Whale” was the best example of rogue trading in history. This trader was responsible for manipulating the price of the credit default swaps (CDS) that U.S.-based investment bank JPMorgan held on investment funds. This highly profitable transaction was undertaken for approximately 5 years without being reported or discussed with anyone.

5. What type of risk is rogue trading?

The risk that is associated with rogue trading is the high potential for loss of money or assets. Rogue traders can be considered to be highly skilled in their skills and can do what they want without any consequences. For example, they can commit insider trading and remain undetected, or they can manipulate the prices of assets and exchanges on a global scale without anyone being able to detect them. Another risk is the possibility of being found out and subjected to financial penalties. Directly participating in a criminal act can lead to jail time and fines. If you, as an individual, have illegal information, you can be charged with fraud or insider trading. This can also result in fines and jail time, depending on the type of crime and which country you’re located in. Institutions that engage in these types of practices will be fined by the SEC, just like any other firm that engages in this type of behavior.

6. Why does rogue trading happen?

Rogue trading is a result of the increasing complexity of financial markets. A growing number of regulations have made it a more difficult environment to fool an investor. The existence of rogue trading also suggests that there are still many investors who have not been duped into committing any illegal acts. Rogue traders can take advantage of this and use the high volume of trades that are taking place to commit their illegal transactions.

7. Who ruined Barings?

The Barings Bank of London was a well-known international banking institution that operated between 1762 and 1890. It was involved in a rogue trading scandal from 1995 to 1997, which resulted in a loss of approximately $1.4 billion. This event resulted in the resignation of the bank’s then CEO, Nick Leeson. The scam involved Nick Leeson trading on information that he had illegally obtained from high-level insiders to place bets on financial markets. Barings Bank suffered a total loss of its capital, and its owners were forced to merge the company with another bank called NatWest.

8. What did Nick Leeson do?

Nick Leeson was born in the United Kingdom in 1967. He joined Barings Bank as a clerk, but he was promoted to a position in their Singapore office. This took place after he had been with the bank for just a few years. While working there, Nick Leeson recommended that his bosses carry out trades on financial markets. His suggestions proved to be very profitable, and this type of activity continued even after Nick Leeson moved back to London. His actions were viewed as a breach of duty to the bank. In 1995, the value of Nick Leeson’s trades went up and his wealth increased significantly. By 1995, he was responsible for $2 billion worth of losses at Barings Bank. In March 1996, he was arrested and charged with three counts of fraud. He pleaded guilty and was sentenced to 6 1/2 years in prison. There is also a trading movie about this incident.

9. Where is Nick Leeson today?

Nick Leeson’s prison sentence was cut short after he served less than half of it. He emerged from jail in 1999 and then became a popular public speaker. Nick Leeson has also written a book about his experiences and has continued to stay in the limelight ever since. Despite his efforts to protect himself, Nick Leeson continues to maintain contact with his family members. His family members include his ex-wife, two daughters, and his parents. He currently lives in Barna, Co Galway where he is said to be working as a property developer.

10. What did Nick Leeson call his error account?

Nick Leeson’s account that contained his rogue trades was officially called the “error account” or “88888”. This account was used to disguise the fact that Nick Leeson’s actions were against what was supposed to be done. The existence of this account meant that those who were responsible for monitoring the transactions had no idea of what was going on. It is evident from the name of this account that it is anything but a ‘normal’ bank account and only exists in exceptional circumstances. Nick clarifies that he named the account 88888 thus, to remind him that it is there just in case he gets out of control. 

11. Analysis of Nick Leeson’s trading practices

Nick Leeson was able to turn his rogue trading into a lucrative business by setting up an investment fund with the help of an American broker. This fund managed over $2 billion. He managed this through the use of computer programs which allowed him to manipulate the prices of financial assets, according to his own needs. This technique was described by Nick as a “business being built on sand”. He also described the use of this technique as “taking a sledgehammer to crack a walnut”.

12. What are Barings Bank’s views on this scandal?

Barings Bank has always maintained that they fired Nick Leeson after it was established that he had broken the rules of the bank. They deny any involvement in what was going on and maintain that they were not a part of his activities. Some reports suggest that they were also a victim of his rogue trading, but this is unconfirmed. The firm has been accused of not doing enough to distance itself from Nick Leeson. Once he was caught, they ensured that he continued with his role at the bank to show that they were not involved in the scandal. The firm has maintained that it was a clear fact that Nick was guilty and he should never have been employed by them again.

13. What was the 88888 account?

Nick Leeson set up this account in 1993 after moving to Singapore from London. He created the account so that he could stifle any suspicions that would be raised by a sudden lack of activity. The nickname for this account refers to a combination of his initials and the number 8, his lucky number. He called the account 88888.  Despite Nick Leeson’s best efforts to keep this account under wraps, it was discovered by Barings Bank and prompted an investigation that resulted in the uncovering of his frauds. He hid the losses by falsifying records in an errors account called 88888.

14. In what ways was Nick Leeson ruined?

Nick Leeson was ultimately ruined by the crisis in Barings Bank. He had the funds that he needed to continue his trading activities stored in this account, so he had no worries about running dry. Due to the nature of his activities, he was already very wealthy and did not need any more money as he explained that it would “burn a hole through his pocket”. Nick Leeson’s mistake was that he continued to look for new methods of getting rich as a result of his wealth. When his activities were uncovered, it caused the bank to lose a lot of money and ultimately led to the downfall of the company.

15. What were Leeson’s views on risk management?

Nick Leeson is believed to have always taken great pride in his risk management techniques, but he was also attracted to complicated bets that could potentially make him richer than he imagined. He was in charge of the bank’s operations in Tokyo and he was a big fan of the trend-following technique. This method of management involves developing a system for trading that is based on the future expectations for a particular asset that is analyzed through so-called charting. He did not hold any official role within the firm, but he continued to take risks with his trades and this meant that his activities were not uncovered until it was too late to do anything about it.

16. Why does rogue trading happen?

There are several reasons why rogue trading happens. The most common one is that it is caused by employees who have been given a great deal of power and are intent on using this power to benefit themselves. When they do take advantage of the situation, they manipulate and hide the transactions which contain their rogue dealings. They do this in such a way that no one finds out about them until it is too late. When these rogue transactions are discovered, the employee’s firm loses a lot of money and goes into financial difficulty as a result.

17. Is there a list of rogue traders?

There are no official statistics on rogue trading, but there are several cases that have surfaced that have made it into the news. This is mainly because of the amount of money involved in the transactions and how much it has caused a financial headache for those responsible. One of the most well-known cases is that of Nick Leeson. This is because his case was so widespread and widespread due to his large number of trades with Bank Barings and his involvement with Asian cultures to continue taking advantage of them. There are a few notable names that have been associated with this field, including Javier Martin-Artajo, who was an employee of La Caixa. This is a Spanish bank and there are suggestions that he embezzled nearly $200 million between 2008 and 2013.

18. How do I report a rogue trader?

If you suspect that someone is involved in rogue trading activities, you can contact your local financial regulator, who will then investigate the case. You can also contact the police, who will only get involved in cases of direct involvement or embezzlement. If you have experienced any difficulties or feel that your money has been misused, you can speak to a lawyer who may be able to help with your situation. This will help to help you to reclaim your money and avoid any future problems with rogue traders.

19. Do police deal with rogue traders?

The police will only deal with rogue trading if there is evidence of a specific crime being committed. This crime is usually a fraud, but it could also be insider trading or tax evasion. Once the police have established that a crime has been committed, they will step in and make arrests and begin the investigation into the perpetrator. Likely, they will not investigate cases of rogue trading unless there are suspicions that an employee has deliberately manipulated their company’s accounts.

20. Do tradesmen have a blacklist?

With over 1000 names recorded on the tradesmen blacklist, you can rest assured that companies have a blacklist, but they are not interested in sharing this information with you. If a tradesman is on the list, then you will not be able to obtain any services from them, even if this is due to a misunderstanding. It could be as simple as the trader being late for work or misinterpreting your order for work, but if it appears that they are not what they seem and cannot be trusted, then you should remove them from your list. You should not try to get information from the blacklist, as you are likely to be banned from using it.

21. Who is on the tradesmen blacklist?

The tradesmen blacklist is a list that has been created by homeowners who want to keep their property safe from intruders, but it also serves a second purpose. If a tradesman is on this list, then they will not be able to offer their services again. It is worth noting that these lists are not connected, so there is no way of knowing which companies have been blacklisted. There are several reasons why a tradesman would be removed from the list, including the fact that they have behaved inappropriately or have been unprofessional in their dealings with customers.

22. How do I get my money back from a rogue trader?

If you have been the victim of a rogue trader, then you can issue a court claim or you could try to contact the Financial Ombudsman Service. If you are not happy about what has happened, you can also apply for compensation for any losses or damages caused. To receive compensation, you will need to prove that you were the victim of a rogue trader, so it is worth looking into this option. You may also be able to receive compensation for fraudulent trading or if you have suffered mental distress as a result of the rogue trader’s actions.

23. Why do companies want to keep their rogues anonymous?

When companies are dealt with in court, they know that they will be identified as either the defendant or the plaintiff. They will also have access to details, so they know where they can expect banks and businesses to look for them. If you want to avoid this, then you can either stay anonymous when making a complaint or you can change your name.

24. Can rogue traders be sued?

As with any other business, a rogue trader will not want to be found out while they are involved in illegal activities. This means that they will not want to be connected with their activities even if they are responsible for the financial problems that they cause. If you have been the victim of rogue trading, then you can use the law to your advantage. You can claim their business or their assets and if they are unstoppable, then they will be unable to get access to money to fund their activities.

25. How do I protect myself from rogue traders?

If you have doubts about a tradesman, then you can ask your company to check their details before issuing them with an order. If these checks reveal that they are not who they appear to be, then you should contact the police and financial regulator. By contacting these agencies before you carry out any work or take your money, then you will be able to avoid any problems in the future. As long as you have an idea of who you are dealing with, then you can decide on whether or not to proceed with the transaction.

Conclusion

As you can see, rogue trading is a wide topic with several different areas covered. What we have discussed in this article goes a long way in helping you to understand the subject and how it could affect you. It helps one get aware of the problems that rogue trading could cause and this means that users can take the necessary precautions such as using the services of a reputable company and getting reputable tradesmen to work in their homes. Rogue traders are often easy to pick out and if you know what signs to look for, then you can avoid them entirely.


Tags


You may also like

Swing Trading Alerts (+Results)

Swing Trading Alerts (+Results)
{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

Get in touch

Name*
Email*
Message
0 of 350
>

Login to Your Account



Signup Here
Lost Password