“Vice and infamy have their altars and their religion.”
– William Hazlitt
The world of finance is a living and breathing community. Trillions of dollars change hands every day and naturally, some investors will walk away as winners. Still, there is a certain amount of infamy attached to this environment. Some individuals have pushed the boundaries of what is known as “fair” while others have crossed them entirely. Let’s look at a handful of traders who are known for their unscrupulous actions as well as the impacts that they have had upon the fiscal sector.
Mr. Hamanaka was a chief trader at a Japanese copper-based corporation known as Sumitomo. In 1996, it was suspected that his team had cornered as much as five per cent of the copper market. Known for its aggressive trading style and for taking no prisoners, his dealings were eventually uncovered. The Sumitomo Corporation suffered a loss of $2.6 billion dollars and Mr. Hamanaka was imprisoned for eight years. Since then, Japan has forced trading firms to adopt more transparent policies.
Many would argue that Nick Leeson is the most famous rogue trader in history. In 1995, Mr. Leeson caused Barings Bank to file for bankruptcy after more than 233 years of continuous operation. Prosecutors found that he was opening up a number of risky positions in relation to Nikkei-based futures contracts. Unfortunately, things did not go as planned. As a result of his illegal dealings, the bank accumulated a net loss of a staggering $1.3 billion dollars. Not only was the institution forced to permanently shut its doors, but Mr. Leeson was jailed for more than six years. It is interesting to note that his story served as the basis for the film Rogue Trader starring Ewan McGregor.
No list of infamous traders would be complete without mentioning the debacle known as Bernie Madoff. This former stockbroker is now known as being the chief ringleader of the largest Ponzi scheme in history. It is said that he eventually cost his clients in excess of $64.8 billion dollars. More than 4,800 individuals fell victim to his fraudulent activities and some of these were high-profile names. The list included Steven Spielberg, Kevin Bacon, Kyra Sedgwick, Larry King, Zsa Zsa Gabor and John Malkovich. However, the true tragedy is associated with those countless souls who invested a portion or all of their life savings only to be duped in the long run. Mr. Madoff is currently serving a prison sentence of 150 years and he will likely spend the remainder of his life behind bars. His actions also highlighted the many loopholes found within the Securities and Exchange Commission; causing regulatory changes to be made.
A Few Bad Apples
While there are always a few unscrupulous individuals within any industry, the financial markets still offer a wealth of opportunities. By understanding the core basics and learning spread betting (amongst other skills), you will not have to rely upon anyone else for your financial future. The power is in your hands.