The largest exchange losses


For many, the exchange is a place where you can suddenly get rich, you just need to bet on the right "horse". Perhaps these stories will warn some naive gamblers against easy money.

Nick Leeson, $ 1.3 billion loss. Nick was one of the most famous "Rugers" in history. In 1992, Leeson was only 28, but the rising star of trading has already become known in narrow circles. The young man was lucky, which allowed him to become even the head of the operations department of Baring's Bank, representing him on the Singapore International Currency Exchange. However, Leeson's actions caused the bank huge losses. Nick launched into independent speculation in Nikkei futures and options, hiding them for a long time in his own secret account. The turning point in the fate of the young talent came when he put a short straddle on the Nikkei. Such actions caused an effect similar to an earthquake - the Japanese index collapsed the next day. Leeson had no choice but to try to recoup, while making more and more risky bets. Naturally, he risked other people's means. Such actions inevitably led to even greater losses. Is it any wonder that the gullible Barings Bank filed for bankruptcy in 1995? The financial institution, which lasted 230 years, was eventually sold for just £ 1, a token price. Nick Leeson himself, after fleeing, was nevertheless arrested and ended up in a Singapore prison, where he spent 4 years. The man was released in 1999 after his health deteriorated. At large, the former trader became the author of the bestseller "Aggressive Trader", which was even filmed. Only now the author was forced to give the entire fee to the bank's creditors. Now Nick Leeson lectures, receiving royalties of at least 100 thousand dollars. Businessmen are willing to pay $ 300 to listen to the legendary financial fraudster.

John Rusnak, $ 691 million loss. The American branch of the largest bank in Ireland, Allied Irish Bank, hired John Rusnack in 1993. This currency trader Allfirst Financial since 1996 began to make very risky transactions with the Japanese yen. Naturally, Rusnak had to play a double game. He himself was a quiet, inconspicuous family man. But for his work, John had to use fake names and documents. This helped him hide growing financial losses from partners, in particular on the Japanese yen. In 1997, Rusnak's losses amounted to 29.1 million, but appetites were growing, in 2001, John had already lost 300 million. It was not enough for Rusnak to hide his losses, he also falsified the statements, which optimistically stated that the bank continued to make profit. As a result, the resourceful trader received bonuses in the amount of 433 thousand dollars for his "successful" operations. The last straw was the loss of $ 300,000 on options trading. At that time, the total amount of losses was 691 million. Rusnak was sentenced to imprisonment for 7.5 years, and the court also sentenced him to pay the entire amount lost by the bank as a result of fraud. The FBI called the Rusnak scam "the largest bank fraud in the United States in the past decade."

Yasuo Hamanaka, $ 2.6 billion loss. Yasuo Hamanaka was nicknamed "Mister Copper" and "Mister 5% in the Account" for his activities. He worked as a trader for the Japanese company Sumitomo Corporation. She specialized in copper trading, being one of the largest wholesalers in the country. Hamanaka himself later stated that at a certain stage in his career, all transactions he conducted accounted for 5% of the world's operations with this metal. Yasuo was the average office manager - commuting to work by commuter train, sharing the walls of the office with nineteen employees like him. Only now the Japanese liked to stay at work for a long time. Hamanaka carried out his financial machinations from 1986 to 1996, their scale indicates that it is unlikely that he acted independently. Most likely, there was participation in a large-scale collusion, which made it possible to change the quotation levels. Hamanaka was buying up copper contracts, creating an artificial rush and high prices. The scam was opened in 1996, the fraudster was sentenced to 8 years in prison. The investigation found that the fraudster was also engaged in forging signatures of other traders, thus hiding his losses. When the market learned of Yasuo's antics, copper prices worldwide fell 15%! As a result, the Japanese served seven of eight years and is now at large.

Liu Chi-Bing, estimated loss of $ 1 billion. And this trader was engaged in metals. According to some reports, he worked for the State Bureau of Reserves of the Republic of China. The glory of Chi-Bin was brought by his big bet on the fall of copper quotations on the London Metal Exchange (LME). The Chinese man decided to purchase 200 thousand tons of copper, which exceeds the reserves of this entire exchange and is comparable to the total copper reserves in his country. This intention significantly changed the growth of metal quotations. The unlucky player had only to hastily leave England without fulfilling his contractual obligations. The situation calmed down only thanks to the Chinese authorities, which hastily began to reduce quotations. They achieved this by informing investors about the volume of state reserves 5 times more than it was estimated earlier. At the same time, the authorities in every possible way denied their connection with Chi-Bin. He, allegedly, acted at his own peril and risk, therefore he himself must be responsible for all losses. Experts believe that the sharp rise in the price of copper futures could be used by those who stood behind the trader. It was they who were able to get the maximum profit on the wave of excitement. China is hiding any data related to Liu Chi-Bing, so the damage can only be estimated approximately. And the location of the fraudster is still unknown.

Brian Hunter, $ 6.5 billion loss. Canadian Brian Hunter was a trader at the Amaranth Advisors hedge fund. The man decided to play on the rise in natural gas prices. In 2005, hurricanes Rita and Katrina unexpectedly hit America, as a result of which blue fuel futures jumped in price threefold! This even allowed Hunter to get into the prestigious ranking of the most honorable traders in March 2006, taking the 29th place there. Only soon the threat of hurricanes decreased significantly, and Hunter's misappraisal of the market brought Amaranth advisors 6 billion in losses! The company fired a failed trader. Later, the authorities carried out investigations, which eventually established the guilt of a trader who dishonestly tried to influence market prices of fuel. As a result, Hunter was fined $ 30 million. His attempts to organize his own fund for doing business were thwarted by the authorities, who banned the dubious player from appearing on the exchanges.

Jerome Kerviel, $ 7.1 billion loss. On January 26, 2008, the Parisian financial police detained a man who had recently brought down the world markets. It turned out to be Jerome Kerviel, a trader at Société Générale, a major European bank. The reason for the arrest was the disappearance of as much as $ 7 billion from the bank accounts! Kerviel joined the bank in 2000, immediately after graduating from university. Two years later, he is a trader's assistant, and since 2004 he has already started trading independently. An inconspicuous player was engaged in the futures of European stock indices, he just had to use simple tools to predict whether they will go up or down. The trader's level was not high enough to make risky or high bets. But Jerome has learned to deceive the control system by creating fictitious transactions. The system developed by Kerviel made it possible to place bets for 50-75 billion euros, which significantly exceeded the capital of the bank itself, and the budget deficit of all of France. The fraud was discovered on January 18, 2008. The bank's management, at a loss, tried to close all positions, but this caused panic in all world markets. The experts, having studied the case materials, concluded that Jerome acted with the consent of his leadership. As a result, two cases are pending in the courts of Paris, according to one of them the bank accuses its trader of fraud, and on the other the already anonymous client Société Générale has come out against the trader. The worst thing about this story is that Kerviel did not even try to make money personally. He was just arrogantly trying to build a career by risking other people's money.

John Meriwether, $ 5.8 billion loss. By 1994, John Meriwether was already an experienced trader, focusing primarily on bonds. In the 80s, he was able to make millions for Salomon Brothers. However, the machinations of one of John's subordinates led to his resignation. The trader conceived a grand revenge plan. To do this, in 1994, he created his own hedge fund Long-Term Capital Management (LTCM), whose assets exceeded 1.3 billion. Meriwether was able to lure the best traders of Salomon Brothers. Among the founders was also the bigwig from the Federal Reserve System and the legendary theorist of the stock exchange business, Myron Scholes. I attracted Meriwether as a client, I tell you about a market strategy that will reduce risks to almost zero. The fund's performance was impressive - 20% in 1994, 43% in 1995 and 41% in 1996. In the spring of 1998, the fund indirectly controlled about 5% of the world market. In the same year, Meriwether staked on the stabilization of the Russian market by acquiring a large Russian debt. However, soon our country declared a moratorium on the payment of foreign debts, followed by a default, which was the first step in the collapse of the mighty fund. To prevent the financial crisis from overwhelming other companies, the US administration provided LTCM with a $ 3.65 billion loan. As a result, the company paid off all of its creditors, finally closing in 2000. Meriwether was ruined by an excessive, romantic belief in the laws of the market and the hierarchy of power structures. In fact, it turned out that economic and political intrigues can force a huge country to declare a default without any prerequisites for this.

Julian Robertson, $ 17 billion loss. If before Julian was listed among the greatest investors, today he is the biggest loser. In 1980, Robertson opened his own hedge fund, Tiger Management. For 10 years, 8 million investments in it turned into 8 billion. The minimum contribution was 5 million. It was Robertson who most successfully chose where to invest. His personal annual income was between $ 300 and $ 400 million! But with the beginning of the 90s, Julian begins to gradually lose his grip, he is pursued by failures. In 1996, Robertson lost 200 million on a deal with US Treasuries, two years later, the fund finally fell into decay due to a fatally unsuccessful game against the Japanese yen and the bursting of the bubble of high-tech companies. Julian preferred to invest in the most promising stocks in his opinion as part of his strategies. The Tiger Foundation began to suffer significant losses, its assets were reduced to 6 billion. As a result, in 2000, it was decided to close all subsidiary investment companies, returning the remaining capital to investors. Robertson himself left Wall Street.

Peter Young, $ 400 million loss. Peter Young worked for Morgan Grenfell Asset Management as a fund manager. The company was later acquired by Deutsche Bank. In 1996, Peter was urgently fired from the company after it was discovered that his European Growth Trust was operating with serious disabilities. Investigation revealed that Young had secretly set up several shell companies that were pursuing stock options to his advantage. Young caused damages of 400 million, after which he chose to flee from justice. After 2 years, the former investor was spotted near London, dressed in shabby women's clothing. Young was accused of organizing a fraudulent scheme. But at the trial, Peter put on women's clothes and said that he should now be called exclusively like Elizabeth. The judges reasonably questioned the sanity of the accused. Over time, it turned out that Young even inflicted several injuries on himself. The case was eventually closed, as the main defendant was declared insane.

Hunt Brothers, at least $ 550 million in loss. Between 1979 and 1980, Nelson Bunker and William Herbert Hunts purchased over 100 million ounces of silver bars. The legacy of their father, a Texas billionaire, of $ 6 billion, allowed them to play this game. This brought the price of silver down to $ 50 an ounce. By 1979, the brothers, along with the kings of Saudi Arabia, controlled a third of the global silver market. In January 1980, the first wave of falling quotations began, and March 27 was even nicknamed "Silver Thursday" for its rapid fall. After the collapse, the brothers were forced to sell 59 million ounces. If earlier they paid 1.75 billion for them, now they have rescued only 1.2. Thus, the losses amounted to at least half a billion. But the brothers continued to act in the same manner, finally going bankrupt in 1988. They got to the court by subway. In addition, the authorities discovered that the Khanty were trying to play a foul game, as a result, Nelson was fined 10 million for his attempts to control the prices of metals.


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