Rogue Trader Paper

2088 Words Apr 15th, 2012 9 Pages
Rogue Trader COSO Control Questionnaire
Control Environment:
1). The possibility of Nick Leeson being able to defraud Barings can be explained by the lack of management supervision. Since Leeson was making a lot of money for the company, senior executives didn’t punish him. Here are three examples of this: * The funding kept coming even after company realized that Singapore law had funding restrictions * Senior Executives didn’t punish Leeson for the violations he had committed * After Leeson was arrested, management didn’t seek any ways to comment on his actions.
2). Barings bank was more concerned with the bottom line profits rather than compliance with the code of conduct. The film didn’t exactly show if Barings had a
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5). The film didn’t portray a formal evaluation of Leeson, which makes it difficult to say whether or not ethics are woven into the criteria to determine performance.
6). Management lacks the ability to react appropriately when receiving bad news from subordinates. For example, when Brenda Granger, who had transferred cash to Leeson to meet SIMEX payments, told Ron Baker that 20 million of margin payments in one day’s trading are a lot, Ron didn’t react. His main argument was that Nick is making a ton of money for the Barings and it doesn’t matter what he does to accomplish this. When Leeson suggested he stopped trading, Ron made Leeson understand that this was out of the question. 7). When instances of noncompliance occur, board members and senior executives take appropriate actions. For instance, Leeson’s assistant sold twenty contracts instead of buying them; Simon Jones’s decision was to fire her immediately. Even though the punishment was very severe, it still showed that board members and senior executives did take action when noncompliance occurred. However, Barings didn’t ensure action through testing. They were not concerned with the reason for the mistake and didn’t see the need to investigate what went wrong to eliminate possibility of such error in the future. 8). No process existed to resolve close ethical calls. When Leeson broke the law by engaging in a unethical behavior at the bar, the

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