Words: Richard
‘The bell chimed for eight o’clock, and within one and a half seconds, the time it took for everyone to fill their lungs, the noise level exploded from a loud hubbub of chatter into a deafening roar… My products were notionally called Japanese Government Bonds, or futures, or options, but nobody cared what the hell they were. They were just numbers to be bought and sold. It was like trading ether.’
So riffs another keyed-up passage from Nick Leeson’s Rogue Trader: How I Brought Down Barings Bank and Shook the Financial World, a paperback probe into the primal appeal of the bear pit. Delivered with the high drama of Liar’s Poker and the black humour of American Psycho (you suspect Leeson was in possession of dog-eared copies of both books when he wrote his own ode to the bull-market banking culture of the late-eighties and early-nineties) it is both a cautionary tale for the Wall Street wannabe and exactly the opposite. A confession-cum-critique of what happens when capitalism is left to run riot, it zings with enough Wolf of Wall Street-worthy monologues to read like a movie pitch. It must have struck a chord with James Dearden, because the writer/director made a film about Leeson while the ex-derivatives trader was still in the nick. Belfort had to wait six years for Scorsese to take his memoir to the big screen.
Nick Leeson is escorted by police through Singapore’s Changi airport following his arrest in Frankfurt
Twenty-five years after it was published from a cell in Singapore’s Tanah Merah prison, Rogue Trader, a book about derivatives, arbitrage trading and futures contracts, essentially, remains an improbably rip-roaring read. Much of that has to do with the ability of Leeson, and his as-told-to co-author Edward Whitley, to present the shibboleths of the trading floor in layman’s terms. ‘Futures contracts enable you — for the cost of a small ‘margin’ payment up font — to buy or sell a basket of shares at a given price in the future, typically anchored around four dates: the ends of March, June, September and December.’ More has to do with the weird obsession that you, I, society in general, but young men in particular, have with the billion-dollar fuck-ups of white-collar criminals.
Before we get to the bizarre phenomenon of canonising financial scoundrels as some sort of latter-day Robin Hoods — the notion of the swashbuckling barrow boy giving the two-fingered salute to the Sheriff of Wall Street is about as watertight as the buckskinned gunslinger avenging the rustlers on the American frontier — it pays to be reminded of the tale of the original rogue trader and the collective fixation that followed.
"The first big shock had measured 7.2 on the Richter scale, the worst earthquake to hit Japan since 1923..."
“Nick, there’s been an earthquake in Kobe. The market’s going to fall out of bed.”
Leeson watched his alarm clock tick over to 5.47am, then fell out of bed himself. Trying not to wake his wife — a switched-on, back-office bank clerk who’d been assigned to him in Jakarta — Leeson slid out of bed, showered, then made his way across the still-dark island city-state to the towering silhouette of the Overseas Union Bank Centre, home to the Singapore Stock Exchange. It was Tuesday 17 January 1995.
The first big shock had measured 7.2 on the Richter scale, the worst earthquake to hit Japan since 1923. It had erupted under the island of Awaji, 47 kilometres from Kobe, 68 kilometres from Osaka, the location of Japan’s second largest securities exchange. Everyone on the Singapore trading floor had family and friends in Kobe and Osaka.
Leeson, in his distinctive yellow-and-navy trading jacket — most traders in the East favoured blazers in bright red, the colour of luck — stood by the Barings booth and watched the madness unfold. On the other end of telephones, dazed Japanese traders were talking about the cracks that had appeared in their walls. Their clients were selling shares to pay for the damage. The market was about to be butchered but Leeson, already some £208 million down thanks to a series of risky derivatives plays in the weeks and months before, remained calm. Amid the chaos, Leeson saw opportunity.
The Singapore Stock Exchange, where Leeson doubled down on his perilous position
‘Hong Kong, Singapore Indonesia… People described them as the ‘tiger’ economies, and we all looked across to the Far East as an exotic place to work; a fast, racy place to make a fortune, where the bars offered cheap cold beer and James Bond women.’
Before the after-dinner speaking, before Celebrity Big Brother, before the book that was turned into a film (dreadful watch; decent soundtrack: Rock the Casbah, Song 2, Can’t Take My Eyes off You), before the six-and-a-half-year prison sentence (reduced to three-and-a-half years after Leeson developed colon cancer) before the six-figure bonuses (£135,000 in 1993) before the hidden accounts, unauthorised trades and unhedged positions that led to the collapse of Britain’s oldest merchant bank (a record loss that Leeson held until a French trader blew through $1.4 billion at Société Générale in 2008, more on whom later) there was an aspiring 18-year-old from Watford who’d just landed a job settling cheques for Coutts & Company in the City of London.
On 27 October 1986, a cold, drizzly Monday morning the following year (according to newspaper reports, anyway) Thatcher pushed through a series of niche technical reforms designed to open the Square Mile to the sort of free-market freebasing that was turbocharging the canyons of Wall Street and creating new financial centres in the Far East. The City, notoriously old-school in its banking traditions, watched, waited, got its collective head around the new regulations — or lack thereof — went to lunch, went to the pub, and then went BOOM.
"I could smell and see the money: it was hanging in the air right in front of me, invisible but highly charged..."
American banks, beginning to see Europe as more than somewhere to vacay, sent harbingers to London to set up ‘international headquarters’. Magnetised by the hot drama and big money of high finance, wide boys from Essex and privately-educated bucks from the home counties started swarming onto the first trains into Liverpool Street.
When this all-new, all-American style of capitalism outgrew the pokey offices of the Square Mile, Canary Wharf, the vision of Long Island-native (and Eurodollar-pioneer) Michael von Clemm and Kentucky-born property developer G. Ware Travelstead, was created to accommodate the demand. The whole estate, with its huge, open-plan offices, was designed according to the sprawling, football-pitch-sized requirements of the Wall Street trading floor. Two of the first banks to sign tenancy agreements were Morgan Stanley and Credit Suisse First Boston.
Within 11 months of Thatcher’s reforms, the blue-chip index was up 50 per cent. By this point, Leeson, the son of a plasterer who’d been brought up on a council estate, was working in the Futures and Options Division of Morgan Stanley. He arrived at the back office of Barings’ City headquarters in 1989, 22-years-old and ready to bite the arse off a bear, as went the newly-coined American adage.
‘I could smell and see the money… it was hanging in the air right in front of me, invisible but highly charged, just waiting to be earthed… there was lightning in the air and all I had to do was give the right signals and it would charge through me as if I were a copper conductor.’
For the rest of the week the market remained stoic. Before the earthquake Leeson had been betting that Japan’s Nikkei 225 Index would remain flat. For his strategy to pay off, the Nikkei had to remain between 18,500 and 19,500. Had the Japanese government launched a huge reconstruction plan, things may still have panned out.
Instead, on Monday 23 January, after an initial 30-point rally, the Nikkei started to plunge. No one had seen the index fall so fast. Every five minutes Leeson checked his positions, praying for a bounce. None materialised. Over the course of the day, the index dropped an unheard-of 1,175 points. By the time it hit 17,800, Leeson had lost another £100 million.
By this point, most traders would have cut their losses. Instead, Leeson, Barings’ star man, the magician trader responsible for bringing in the profits upon which bonuses were paid, began a frantic period of doubling up — a strategy that will be all too familiar with anyone who’s ever found themselves on a losing streak at a Las Vegas roulette table. Leeson started throwing his weight around, buying Nikkei futures on an unprecedented scale. He was shoring up the world’s second largest stock market almost by himself.
By February rumours started to swirl that Leeson was trading Barings’ own capital rather than the investment of his clients. The market, not wanting to be bought down when Leeson eventually had to unwind his positions, began selling against him. Banks that had been lending to Barings to cover Leeson’s trades called in their loans. It took until mid-February for Leeson’s superiors to finally clock-on to what he’d been up to.
Time to run.
"Leeson started throwing his weight around, buying Nikkei futures on an unprecedented scale..."
‘We started buying and selling numbers. I suppose everyone is buying or selling numbers in some form or another… we just had to buy and sell abstract numbers. They were big, but they were unreal and they changed with astonishing speed.’
Peter Baring, Barings’ chairman, is hosting a black-tie dinner party at his home in Notting Hill when he receives the telephone call. “I’m afraid I’ve got some rather bad news,” Peter Norris, Barings’ CEO, delivers down the phone.
That’s how it’s depicted in the film anyway, presumably to hammer home the class differences between Barings’ blue-blooded board members — five ancestral Barings received hereditary peerages during the bank’s 232-year history — and their freewheeling chiseller in the Far East (played by Ewan McGregor, who’s mockney twang would make Joe Wicks wince).
The day before, on Thursday 23 February 1995, Leeson had driven a rented Mercedes sedan across the Johor–Singapore causeway to Malaysia. From there, he and his wife boarded a plane to Borneo. On his desk he’d left a handwritten note. “I’m sorry.”
Over the weekend, Barings approached the Bank of England with its tail between its legs and its cap firmly in hand. When that failed, the bank turned to the Sultan of Brunei. Even the pockets of the world’s richest man weren’t deep enough to defuse the bomb that Leeson had detonated out in Singapore. On 27 February, Barings, the bank that in 1803 had helped the fledgling United States of America purchase Louisiana from France, was declared insolvent. The cumulative loss, after liquidation, stood at around £927 million (some £1.8bn in today’s money).
After sunning himself on a beach for four days, Leeson bought two tickets to London in an attempt to evade Singapore’s notoriously punitive justice system. After stopovers in Brunei, Bangkok and Dubai, he was arrested in Frankfurt, a baseball cap on his head and a Tom Clancy novel under his arm.
‘“There’s been a House of Commons debate. The Chancellor of the Exchequer has called you a ‘rogue trader’, and Peter Baring has gone on the news and said there’s been a conspiracy. Barings is bust and has lost more than £600 million.” I fumbled for the soap at the bottom of the bath, and felt irritated at the fact that bars of hotel soap are always so small.’
Barings bank, founded in 1762, went insolvent almost overnight
Harry’s Bar is a burger-and-buffalo-wings sort of hangout in a colonial-style building beside Singapore’s financial district. In the week that Leeson was sentenced to six-and-a-half-years, the bar launched a cocktail called the ‘Bank Breaker’. A shot of whisky and a shot of vodka tipped into a tumbler of honeydew melon liqueur, it’s said to go down smoothly — until the alcohol hits like an aftershock from the Kobe earthquake.
Four years later, when Leeson was released, the bar offered punters free beer for two hours as part of its ‘Flight of Freedom’ party. Harry’s Bar still serves the Bank Breaker, 26 years on.
Harry’s wasn’t the only institution to cash in on the biggest financial scandal of the late 20th century. ‘In the Nick of Time’ was a monopoly-style board game by a Singaporean graphic
design company. Players would move around the board trying to amass trading profits while steering clear of disasters such as earthquakes. The objective was to get to London from Singapore via Frankfurt without getting caught.
Society’s interest in high finance’s Big Swinging Dicks was nothing new. In 1988, one year before Leeson hand landed a job at Barings, Michael Douglas had won the Academy Award for Best Actor for his portrayal of Gordon Gekko in Wall Street. By the time Leeson had been transferred from London to Singapore, Michael Lewis’ Liar’s Poker was already a best seller (it was Lewis, a former bond salesman at Salomon Brothers, who introduced the world to the term ‘Big Swinging Dick’). Patrick Bateman, meanwhile, was well on his way to becoming the most venerated anti-hero in modern fiction (name another concocted serial killer that’s made the leap from book to big screen to Broadway).
In 1990, following the downfall of high-profile financial fraudsters Michael Milken and Ivan Boesky, the cover of Newsweek magazine asked ‘Is Greed Dead?’ The collapse of Barings Bank five years later proved that it wasn’t. The success of films and television series dedicated to subsequent Masters of the Universe – Wall Street: Money Never Sleeps (2010), Wolf of Wall Street (2013), The Big Short (2015), Billions (2016-present) — demonstrates that our fascination with trading-floor rainmakers is pretty unvanquishable, too.
"Barings, the bank that in 1803 had helped the United States of America purchase Louisiana from France, was declared insolvent..."
“When I used to teach forensic psychology to third-year undergraduate students, I was always interested to listen to these young adults’ discussions on the differences between blue- and white-collar crime,” says Dr Meg Arroll, a social scientist that looks at the psychological drivers behind human behaviour. “In many of these young minds, the latter seemed almost justifiable, even romanticised as a type of Robin Hood retribution. The offenders were often viewed as modern-day heroes, sticking two fingers up to seemingly impenetrable institutions.”
That certainly seemed the case with derivatives rogue trader Jérôme Kerviel, who, after making Société Générale around €1.4 billion in 2007, lost the French investment bank €4.9bn in January 2008. Not long after Kerviel was taken into custody, Parisians began sporting t-shirts bearing his face. The media dubbed him ‘the Che Guevara of France’. An opinion poll showed that only 13 per cent of the French population blamed Kerviel for SocGen’s losses; half blamed the bank itself; and a quarter criticised the country’s financial regulators. (This was, bizarrely, the same public who’d voted Nicolas Sarkozy as President a few months earlier.)
“Our obsession with the likes of Kerviel has a lot to do with intellectual criminality,” says Emma Kenny, resident psychologist at the BBC. “The idea that these criminals are different, better, more intelligent, articulate, becomes attractive — even though it’s all nonsense, it plays into the Hollywood idea of what is an acceptable versus unacceptable crime.”
Ewan McGregor, who played Leeson in a 1999 adaptation of the story, sports the iconic yellow jacket which later sold for £21,000
It’s worth noting that the three rogue financiers to have generated the most media attention — Leeson, Belfort and Kerviel — all share a similar, and marketable, rags-to-riches narrative. Leeson, as we know, was a working class lad lining the pockets of Barings’ aristocratic board members. Penny-stock scammer Belfort was born in the Bronx and sold meat door-to-door before blagging a job at L.F. Rothschild. Kerviel, the son of a metal worker from Brittany, had a relatively underprivileged upbringing prior to being held up as a modern-day Gallic Robin Hood.
Dr Jack Denham, a senior lecturer in sociology and criminology at York St John University, studies society’s cultural consumption of crime. Denham believes that while the idea of the working class trader robbing from the rich to give to the poor has a certain cultural attraction, our fascination with financial criminals, or at least the way they are portrayed on film and paper, has more to do with the idea of ‘charismatic authority’ — that we can be captivated as much by charisma as competence.
“People love the Robin Hood fable. Reddit users recently took from the rich [hedge funds with an over-exposed short position] to give to the poor [amateur traders]. People loved that, too. But it’s a socialist fable, isn’t it? Besides, if you steal from the rich to give to the rich, it’s just not the same. I know that you don’t have to be rich to be an investor, but it’s certainly the perception that investors are wealthy and to be conned out of that wealth is to be played at your own game.”
There are psychological reasons, say Arroll, Denham and Kenny, why tales of big-money crime tend to appeal to young men especially. “Young males have an evolutionary drive to seek sources,” says Arroll. “Easy money appears attractive. When there appear to be so many legal tax breaks and avenues for the rare few to increase their wealth, these stories of white-collar crimes go some way to establish a psychological equilibrium where the everyday guy can even up the scales.”
"The three rogue financiers to have generated the most media attention all share a similar rags-to-riches narrative.
“Young males have no money and fall on the side of a gender role split where the social pressure and expectation is that you should have,” says Denham. “Western capitalist society has long valued men for their earning potential and entrepreneurial prowess.”
The glamorisation of white-collar crooks, says Kenny, plays into the ‘immediacy effect’ — the built-in biological mechanism that makes us prone to prefer instant reward over longer-term gain. “Such stories are intoxicating to young men because you can imagine that you could be the one living the dream. You don’t need to earn the money; you can just take the money. The façade of success is very alluring, and the façade of being naughty and mischievous and a little bit dark is also alluring and sexy — and young men like to be sexy.”
Leeson never got the chance to claim his free beer at Harry’s Bar. Upon being released he was deported back to Britain, quickly becoming a regular on the after-dinner speaking circuit.
Since January 2020, the now 54-year-old has been offering investors the chance to follow his trading advice through his new online venture, Bull & Bear Capital. The company is registered in Ireland, where Leeson now lives with his second wife (his first having divorced him while he was still behind bars). After a free 30-day trial, users pay €99 a month to join a members-only group on the super-fast communications app, Telegram. Private mentoring costs an additional €199 per month.
Is it worth the money? Leeson has been posting weekly performance updates on Twitter. Between January and May 2020, reports showed just two losing weeks. ‘Rogue trader Nick Leeson is coining it in during the Covid-19 pandemic,’ howled The Sun. ‘Leeson should give all his profits to the health service,’ wailed former Metropolitan Police detective chief inspective Mick Neville in the Daily Mail. Leeson was up every week between May and late September, but down five of the nine weeks leading up to Christmas. ‘Nasty, nasty week… broke so many of my own rules that I thought I’d gone back in time,’ he tweeted on 23 October. ‘Simply wrong far too often and lacking in restraint,’ came a tweet one week later.
The 54-year-old Leeson now offers investors the chance to follow his trading advice through his new venture, Bull & Bear Capital
The price and size of Leeson’s trades are never disclosed, so it’s impossible to know how much money he has made or lost. He was up as many weeks as he was down from January to mid-February 2021, before, on 23 February, tweeting: ‘Wondered why I was getting itchy feet today. Today is the day that I fled Singapore 26 years ago! I’d be in trouble if it was this year, COVID would have meant it was the Causeway or nothing.’
Gentleman’s Journal asked Leeson if he would like to be interviewed for this feature. We were told that he is still approached on a monthly basis by the likes of Bloomberg and various broadsheet newspapers. Any comment would require a commercial fee. The benefit to our readers, we were told, ‘would not be insignificant’. We asked how regularly Leeson sells a replica Barings trading jacket through his website but couldn’t get an answer. We do know that an original jacket supposedly worn by Leeson sold on eBay in 2007 for £21,000.
We can also say that events since the financial crash of 2007 have only added a premium to the insights of the original rogue trader. In 2011, three years after the fall of Lehman Brothers, Kweku Adoboli, a Ghanaian-born derivatives trader was discovered to have cost UBS $2.3bn. The following year, Bruno Iksil, aka the London Whale, eclipsed the lot when he lit a fuse that would eventually burn through $6.2bn at JPMorgan. After serving just under four years of a seven-year sentence, Adoboli was deported to Ghana. After cooperating with the FBI, Iksil was never prosecuted.
In 2018, 23 years after sinking Barings, Leeson finished fourth in the last ever Celebrity Big Brother. Today, he is managed by the same celebrity booking agency as Ben Affleck, Colin Firth, Ellen Degeneres and Stephen Fry.
"Perhaps, as Steinbeck had it, we’re all temporarily embarrassed millionaires after all..."
Leeson, Kerviel, Adoboli and Iksil cost their banks billions. Big deal. What should vex us more is the ripple effect of their high-stakes games of Texas hold ’em. Credit crunches, interest rate rises and the collapse of share prices in which we’ve invested our savings. You wouldn’t watch a film about a bloke who burst into your home and nicked the family silver, would you? Yet still we pay to hear Leeson and chums speak at black-tie dinner parties. Still we read melodramatic articles about their fiscal malfeasances in glossy lifestyle magazines. Perhaps, as Steinbeck had it, we’re all temporarily embarrassed millionaires after all. Maybe, secretly, we’re just a bunch of Gekko-syndrome-suffering psychopaths.
Denham doesn’t think so. “If it doesn’t make you psychopathic to admire Jeff Bezos for his excellence in building wealth at the expense of the financial independence, wellbeing and quality of life of his workers, then it doesn’t make you a psychopath to think that Frank Abagnale [played Leonardo DiCaprio in Catch Me If You Can] is a pretty talented guy.
“We see this same fascination and admiration when Elon Musk YOLOs $1.5 billion into Bitcoin or uses a cock emoji on twitter. He’s sticking it to the man — and we might do the same, if only we could.”
Read next: These are the best films on financial scandals to watch right now
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