Leeson, Nick (1967– ) Futures trader who caused the collapse of the United Kingdom’s oldest merchant bank, Barings, in 1995. Arriving in Singapore in 1992, after Barings had acquired a seat on the Singapore International Monetary Exchange (Simex), Nick Leeson began as the derivatives operations manager of Barings Futures. He became general manager the following year, and started dealing in Japanese government bonds, then dabbling in Nikkei 225 futures and options.

Holding the positions of both chief trader and head of settlements, Leeson was able to conceal his losses and unauthorized trades in an error account with the designation 88888. Ironically, Leeson’s superiors in London had sanctioned the setting- up of this account, which was used initially to track bona fide trading mistakes and minor accounting discrepancies.

By December 1994, with undetected losses mounting to US$512 million, Leeson bet heavily against the Nikkei index falling below the 19,000 mark. The Japanese economy was stable at the time, so this move was quite reasonable. However, the Nikkei plunged after an earthquake hit the Japanese city of Kobe on 17 January 1995. In a futile bid to claw back escalating losses, Leeson continued to raise the stakes. By the time Barings discovered the deficit in mid- February 1995, it amounted to US$1.3 billion, exceeding the bank’s capital and reserves.

Leeson fled to Malaysia, before catching a flight to London, but was arrested en route in Frankfurt. He was sentenced in 1995 to six- and- a- half years in prison in Singapore, but was released in 1999 for good behaviour.

The Futures Trading Act was tightened after the Barings debacle. However, investigations revealed that much of the blame lay in the bank management’s failure to implement strong internal controls in audit and compliance matters. The absence of such safeguards eventually allowed a single employee— one who had failed his final mathematics exams in school— to bring down a 233- year- old financial institution.

In March 1995, Barings was sold for a token £1 to the Dutch ING Group, which agreed to take over the bank’s debt. Many of Barings top executives resigned or were dismissed, including its chief executive officer, Peter Norris, and chairman, Peter Baring. The Nick Leeson story made newspaper headlines around the world, inspiring books and a film, Rogue Trader (1999), starring Ewan McGregor.