Rogue Trader Essay

758 Words Apr 22nd, 2013 4 Pages
A Short Essay of Rogue Trader
In the movie Rogue Trader, Nick Leeson, a trader on behalf of the Barings Bank of England, made a series of financial fraud to cover the loss he incurred in trading—up to £800 million—in the Singapore International Monetary Exchange which ultimately led to the fall of Barings Bank. This tragedy was a mixed result of the personal greed and the lack of control in Barings Bank’s system. Most of the COSO internal control frameworks were violated with the “Control Environment” and “Information and Communication” being the most critical.
The “Control Environment” requires a company to establish a tone of control system and is the fundamental of all other control components. However, the control environment in the
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However, Nick’s office did not follow GAAP. Accountants were not independent from the trading team. In fact, Nick ordered the accountant to open the 88888 “ghost account” and make records to make the books balanced. There was no valid paperwork about the mystery account; “documents,” when requested by the external auditor, were created by Nick personally. Such poor accounting record system provides no documentation to help control the institution. Indeed, no information systems were established to clearly indicate where and how the information of the Singapore unit will flow. All activities and the related information, from acquiring customers to trading on the floor to keeping record of the accounts, were managed by Nick and his crew. It provided them convenience to manipulate information or to hide it from higher level managers. “People” was another major factor in this insufficient control system. Not all personnel understand their roles. Ash Lewis seemed to be the only one knew her responsibility, yet she was pressured by office politics. Her successor was described as an “easy guy,” and it represented weak internal control. Nick’s direct supervisor, Simon, wasn’t interested in future and options;

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