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A rogue trader is an authorised employee making unauthorised trades on behalf of their employer. It is most often applicable to financial trading, and as such is a term used to describe persons - professional traders - making unapproved financial transactions.
This activity is in the grey area between civil and criminal illegality for the reason that the perpetrator is a legitimate employee of a company or institution, yet enters into transactions on behalf of their employer without permission.
One famous rogue trader is Nick Leeson, whose losses were sufficient to bankrupt Barings Bank in 1995 following his ill-advised and unauthorized investments in index futures. Through a combination of poor judgement on his part, lack of oversight by management, a naïve regulatory environment and unfortunate outside events like the Kobe earthquake, Leeson incurred a $1.3 billion loss that bankrupted the centuries-old financial institution.
Table of largest rogue trader losses
| Name | Loss | Institution | Market Activity | Sentence |
|---|---|---|---|---|
| Nick Leeson, 1995 | £827 million | Barings Bank | Nikkei index futures | 6.5 years jail |
| John Rusnak, 2002 | £691 million | Allied Irish Banks | FX options | 7.5 years jail |
| Toshihide Iguchi, 1995 | £557 million | Resona Holdings | US Treasury bonds | 4 years jail |
| Yasuo Hamanaka, 1996 | $2.6 billion | Sumitomo Corporation | Copper | 8 years jail |
| Luke Duffy, Oct 03 - Jan 04 | AU$360 million | National Australia Bank | FX options | 16 months jail |
| Chen Jiulin, 2005 | $550 million | China Aviation Oil | jet fuel future | 51 months jail |
| Jérôme Kerviel, 2006 - 2008 | $7.2 billion | Société Générale | European stock index futures | investigation in progress |
| Boris Picano-Nacci, Oct 2008 | €751 million | Groupe Caisse d'Epargne | ? | investigation in progress |
See also
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