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Rogue Traders: Kerviel, Hamanaka and Dooley

Posted March 10, 2008

"So how can you spot a rogue trader before he strikes? You simply can’t. There seems to be no amount of regulations, checks, firewalls, or risk management systems that can thwart an intelligent mind bent on mischief." — Jamie Ellis

by Jamie Ellis

Baltimore – (TFN):  There is no set of qualities that defines a rogue trader. There is no profile, no red flags to search for. Rogue traders have earned their telling nickname because they are just that, maverick scoundrels who act outside of the normal rules and procedures that govern the rest of us.

So how can you spot a rogue trader before he strikes? You simply can’t. There seems to be no amount of regulations, checks, firewalls, or risk management systems that can thwart an intelligent mind bent on mischief. There have been several rogue traders in recent history — two notable examples just this year — yet rarely do they ever overlap. The markets, the incentives, the motivation, and even the schemes themselves are often as unique as the men who carry them out.

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That is what makes the story of a rogue trader so fascinating. We can all understand the motivation and diabolical mind behind most financial crimes. When massive financial fraud takes place, greed and power are usually the driving factors. We have seen Enron executives, inside traders, and just plain evil, money-obsessed villains who will stop at nothing to steal from others. The image of a powerful, fast-talking broker often comes to mind when we think about financial frauds. A Gordon Gekko type that is ruled solely by greed. But just a look at recent history shows us that the actual perpetrators don’t fit any one profile. Read on to learn more.

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Posted by Jamie Ellis · Filed Under News that Matters 

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