The derivatives industry has, over the past 30 years, achieved many great things. It has enabled tens of thousands of companies to hedge risk, enabled traders to make millions and harmonised prices in all corners of the globe. However, it has also been responsible for the largest losses in corporate history and produced some of the most notorious white collar criminals. William Mitting takes a look at some of the industry’s villains.
When it comes to rogues in the derivatives industry, there is
a veritable feast of candidates. The prospect of wealth
attracts greed and as Shakespeare’s Henry IV
notes in a warning to his sons: "How quickly nature falls
into revolt, when gold becomes her object."
Rogue traders tend to build up positions over a long period
of time, testing out flaws in risk management systems before
expanding their frauds, often doubling their bets when they
get into trouble with disastrous consequences. However,
others build up massive losses in minutes of unauthorised
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