provide a few teaching points. Nick Leeson seemed to have all the characteristics of an overconfident trader. As described in the chapter‚ excessive trading‚ lack of diversification‚ and too much risk were obviously present. Self-attribution bias seemed to play a major role. One commentator notes that Leeson “got overconfident after initial trades were successful [and] when he started to lose money‚ got way too aggressive trying to make it up.” When Leeson was asked about his actions‚ he explained
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Barings Bank Case Study 1. Nick Lessons sold numerous short straddles for each long futures contract he bought because he need the cash created by the premiums he received by selling the short straddles. Lesson’s needed large sums of cash to fund his margin calls‚ which forced him to sell disproportionate numbers of short straddles for each long future position he took. 2. The doubling strategy allowed Leeson’s the opportunity to recoup losses suffered ‚ which required him to double his bets
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traders‚ Nick Leeson‚ who lost $1.4 billion by investing in the Singapore International Monetary Exchange (SIMEX) with primarily derivative securities. This was actually the second time the bank had been faced with bankruptcy. Following the collapse‚ Barings was purchased by the Dutch bank/insurance company ING (for the nominal sum of one pound) and today no longer exists as a corporate entity; however‚ the Baring family’s name lives on in Baring Asset Management. An autobiography of Leeson and the
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diagrams. Fay‚ S. (1996)‚ the collapse of Barings. ( Arrow‚ London) Gapper‚ J.and Denton‚ N Ross‚ J. 1997‚ Rogue Trader: How I Brought Down Barings ’ Bank and Shook the Financial World‚ by Nick Leeson‚ Boston: Little Brown‚ 1996‚ Academy of Management Review‚ 22‚ 1006-10 Stein‚ M Drummond‚ H. 2003‚ Did Nick Leeson have an accomplice? The role of information technology in the collapse of Barings Bank. Journal of Information Technology. (June‚ 2003)‚ 18‚93-101 Huang‚ M Skadden‚ W. S.‚ 2010‚ Dodd-Frank
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BARING BANKS AND NICK LEESON QUESTION : 1. What are the major reason behind the collapse of Barings bank? ANSWER : The major reason behind the collapse of Barings bank was caused by the largest earthquake that destroyed the part of Kobe City on 17 January 1995‚ where the Nikkei index fell sharply. This incident caused Barings Bank collapsed in 1995 due to high the loss‚ which is very far above their capital. This was due to not being able to meet the obligations of trading‚ Leeson opened on behalf
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the Mid 90’s when Barings caught the attention of the world due to bankruptcy which was caused by one rogue trader‚ Nick Leeson‚ based in a small office in Singapore. His sole trading activities for derivatives on the Singapore and Osaka Exchange lead the 233 years old bank into bankruptcy. Further below we discuss how the bank was lead into bankruptcy. Question 1 & 2 Nick Leeson‚ a young man from Watford in England joined Barings in 1989 from Morgan Stanley shortly after having graduated from
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narrates the true story of a man named Nick Leeson. He brought the Barings Bank down‚ which was one of the most venerable financial institutions in England. Nick Leeson was played by the actor Ewan McGregor‚ who started working in Indonesia for Barings Bank. He then became a trader on the floor of Singapore International Monetary Exchange. Nick’s responsibility was to trade futures and options on behalf of the bank’s clients. As the movie progresses‚ Nick encountered a trading error and experienced
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In today’s global market the need for efficient and reliable tools is of great importance. One such tool that has helped man is that of the computer. With advances in technology occurring everyday‚ the computer is still at the forefront of today’s economic world. With the versatility to perform many different needs for different users‚ the computers future looks pretty bright. As an accounting major student‚ the accounting industry is one that is heavily immersed in computers
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A Short Essay of Rogue Trader In the movie Rogue Trader‚ Nick Leeson‚ a trader on behalf of the Barings Bank of England‚ made a series of financial fraud to cover the loss he incurred in trading—up to £800 million—in the Singapore International Monetary Exchange which ultimately led to the fall of Barings Bank. This tragedy was a mixed result of the personal greed and the lack of control in Barings Bank’s system. Most of the COSO internal control frameworks were violated with the “Control Environment”
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I hope to report back to the FSA on the reasons why financial services require regulation – rules and directions made and enforced by an authorising body – and the consequences that occur if they are not followed. Various issues will be covered including ethics; moral principles that a person or a group of people abide by‚ regulation; rules or directions maintained by an authorising body and law; rules that are enforced by a particular country where penalties and fines are issued If the rules are
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