The Rogue Trader

1489 WordsFeb 3, 20146 Pages
Introduction Have you ever told a lie? In most causes after telling one small lie another lie follows. After time passes and the lies began to seem like the truth, you dig yourself into a pool of lies which eventually contradicts your first lie. The same truth happens to Nick Lesson and his 8-8-8-8-8 account. It all started with 20,000 that turned in to millions that turned in to billions that lead to the collapse of Barings Bank. Although Nick Lesson was to blame, the direct blame goes to the board of supervisors and management of Barings. According to the Committee of Sponsoring Organizations of the Tread way Commission internal control is defined as the procedure, introduced and put into action by the executives of a company,…show more content…
Baring Bank board member totally dropped the ball when it came to risk assessment. During a meeting with his boss Nick stated, “I’d go up to see him in the afternoon, but we mainly talked about football… As for business, we scarlet talked about it.” This means that the business risks are not identified and are not candidly discussed with board of directors. Allowing Nick to hire who he chose was not the pre-initial problem. The pre-initial collapse was neither checking nor evaluation who he hired. This showed that Barings didn’t evaluate risks with regards to new personnel. Also, since Nick was allowed to control trades on the floor and control the office on the back end; this showed the lack of checks and balances; and allowed Nick to get involved with unauthorized business activities. Through this Nick created the 8-8-8-8-8 account. When the 8-8-8-8-8 became aware to upper-level management, it was easily pushed aside. Baring bank didn’t properly evaluate all of the risk. “Nick, what’s the difference between initial margin and variation margin?” This question was asked to Nick from one of his recruits that worked in the back office with him. It is clearly true that Barings provided employees with adequate resources; however

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