How a 28 Year Old Man Destroyed England’s Oldest Bank
ColdFusion・2 minutes read
Nick Leeson's fraudulent activities at Bering's Bank, including hiding massive losses, came to light after a failed bet following the Kobe earthquake, leading to the collapse of the bank and his arrest and imprisonment in Malaysia.
Insights
- Nick Leeson's ability to recover long-overdue debts and initial success in trading impressed Bering's Bank, leading to his promotion despite his unfamiliarity with the bank's operations.
- Leeson's fraudulent activities, including concealing losses in a hidden account and falsifying profits, ultimately caused the collapse of Bering's Bank after a failed gamble following a massive earthquake in Japan, leading to his arrest and imprisonment.
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Recent questions
Who was Nick Leeson?
A trader at Bering's Bank with a troubled history.
What caused Nick Leeson's downfall?
A failed gamble and exposure of fraudulent activities.
How did Nick Leeson try to hide his losses?
By falsifying profits from a secret account.
What led to the collapse of Bering's Bank?
Nick Leeson's fraudulent activities and massive losses.
What was the impact of Nick Leeson's actions?
The collapse of Bering's Bank and his eventual arrest.
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Summary
00:00
Rise and Fall of Nick Leeson
- Bering's Bank, established in 1762, was a renowned English institution, even holding an account for the Queen of England.
- Nick Leeson, a 28-year-old from Hertfordshire, joined Bering's Bank after leaving Morgan Stanley due to his ambition to become a trader.
- Leeson, initially unfamiliar with Bering's Bank, found the bank's operations outdated compared to modern banks like Morgan Stanley.
- Leeson impressed Bering's Bank with his ability to recover long-overdue debts, locating nearly 100 million pounds.
- Leeson married a colleague, Lisa Sims, and was promoted to head a futures division in Singapore, trading primarily on the Nikkei stock index.
- Leeson's trading initially succeeded, but as the market fluctuated, his team's mistakes led to significant losses that he concealed through a hidden account named the "five eighths."
- Leeson's losses continued to grow, reaching 4 million pounds by the end of 1992, prompting him to take risky actions to cover his losses.
- Leeson's fraudulent activities escalated, with the hidden account accumulating losses of 160 million pounds by September 1994, leading to a complex cycle of deceit.
- Despite Leeson's success being celebrated by Bering's Bank, doubts arose among other traders, but the bank executives ignored these concerns.
- Leeson's downfall came when a massive earthquake in Kobe, Japan, caused the Nikkei stock index to plummet, leading to his final desperate bet and the exposure of his fraudulent activities.
16:08
"Nick Leeson's 50 Million Pound Deception"
- Nick Leeson bought thousands more futures contracts to prop up the market, resulting in a failed gamble and a loss of 50 million pounds in a single day.
- He falsified profits from a secret account to deceive the bank, which believed he was profiting from the chaotic market post-earthquake.
- Auditors discovered a 50 million pound loss that Leeson tried to hide by forging a bank loan document with scissors and glue.
- Leeson's deception was uncovered by a clerk in Singapore, leading to his escape to Malaysia, the collapse of Bearings Bank, and his eventual arrest and imprisonment.
