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Rogue Trading within Bank Industry about Nick Leeson - Research Paper Example
Author : nikolauskay
Finance & Accounting
Pages 10 (2510 words)
This paper presents the case of Nick Leeson as to how he brought down one of UK’s oldest banks and the inefficient role played by regulators. The study presents relevant analysis of authenticated literatures, journals and previous related research papers. …
The research tells that corporate scandals can be of different types and in any kind of corporate scandals generally top executive managements are involved due to personal gains and other biasness. Corporate scandal may include the offences like frauds, insider trading, manipulation of financial statement for misguiding stakeholders, excessive compensation to top executives etc. Among these rogue trading is also a kind of corporate scandal which hurts investors’ interests. Generally, those traders who are authorized by corporate bodies as an employee indulge in such activities. The rogue trader acts as an independent trader in high risk environment. To make huge profits, such traders invest in risky financial instruments like derivatives. Here the potential of losing money is also high. Ethically responsible firms never allow such risky investments considering shareholders’ interest and business sustainability. Since the rogue trading case of Nick Leeson in 1995, there have been several instances of unethical and unauthorized trading that caused billions of losses to shareholders. The persons found to be engaged in rouge trading are charged with severe offences and have to face legal consequences. The rogue traders have taken the investments activities to the level of gambling where along with huge returns, risks are also too high. In most cases rogue traders keep doubling their bets in order to recover the previous losses without considering future consequences. ...