Why are traders called "rogues" when the financial institution loses money, but not when the entire nation gets destroyed?

UBS Blames $2 Billion Loss on Rogue Trader
The struggling Swiss bank said that a rogue trader in its investment bank had lost $2 billion. A European equities trader, Kweku Adoboli, was arrested in London in connection with the case.

Traders run amok are often sentenced to pay restitution, in addition to serving jail time or forgoing any future dealings in the securities industry. But few have been held responsible for an I.O.U. as large as the one a French court pinned on Jérôme Kerviel on Tuesday: $6.7 billion.

John M. Rusnak pleaded guilty in 2002 to faking trades in order to hide nearly $700 million in losses through rogue trades of Japanese yen for Allfirst Financial, which was then a subsidiary of Allied Irish Banks.

Mr. Rusnak worked hard to keep his wrongdoing a secret. At one point, in order to trick auditors, he was said to have posed as a fictitious trader, David Russell, with whom he supposedly had dealings. He pulled it off by renting a box at a Mail Boxes Etc. on the Upper West Side in Manhattan; when bank auditors wanted to verify his trades with the supposed Mr. Russell, Mr. Rusnak had them write to that mailbox, where he then replied as if he were the fictitious trader.

Allied Irish Banks sold Allfirst Financial to the M&T Bank Corporation of Buffalo shortly after the scandal came to light. Mr. Rusnak, for his part, was released from federal prison last year and has remained out of the headlines since then.

¶ Earning clever nicknames.The Sumitomo Corporation of Japan in 1996 lost $2.6 billion because of a rogue trader, Yasuo Hamanaka, the chief of the company’s copper trading operations. Before his rogue trades became public, he had earned the nickname “Mr. 5 Percent” — referring to the share of the world’s copper market he was said to control.

Mr. Hamanaka pleaded guilty to forgery and fraud and was jailed until 2005. Paying homage to what made him famous, he told Bloomberg News upon his release that he was “amazed” at how the price of copper had risen while he was incarcerated.

¶ Making the best-seller list. In the mid-1990s, Daiwa Bank lost more than $1 billion as a result of a rogue New York-based bond trader, Toshihide Iguchi. Mr. Iguchi was sentenced to four years in prison, which he told The Wall Street Journal was less painful than the life of deceit he was living as a rogue trader trying to cover his tracks.

While in prison, he wrote a memoir, “The Confession,” that was widely read in Japan. But after settling in Georgia upon his release, the only work Mr. Iguchi could find was a $10-an-hour job at a furniture-building shop, so he eventually headed back to Japan, where he opened an English school, The Journal reported in 2008.

But Mr. Kerviel’s case brought back bad memories. Mr. Iguchi told The Journal that shortly after the French trader was accused, he had nightmares about his own rogue trading.

¶ Going Hollywood. Nicholas W. Leeson, a trader for the British investment bank Barings, managed to topple his bank in 1995 as a result of his rogue trading. Based in Singapore, Mr. Leeson lost more than $1 billion through ill-fated bets on Japanese stock prices and interest rates.

Mr. Leeson pleaded guilty in Singapore to fraud and forgery and served four years in prison. He is now the chief executive of an Irish soccer club, Galway United.

But perhaps best of all, Mr. Leeson managed to carve for himself a place in popular culture. He commanded a reported $700,000 advance for a ghostwritten memoir, “Rogue Trader” (1997), and more recently published a self-help book, “Back from the Brink: Coping With Stress” (2005).

His first book was made into a 1999 film starring Ewan McGregor. The film, like Mr. Leeson’s trading practices, was widely panned.

¶ Putting a spin on things. Joseph Jett, a former trader for Kidder, Peabody & Company, was said to have gone rogue in a decidedly modern way: he was accused of taking advantage of a glitch in his firm’s computer system to record his trades as profitable, even if they weren’t. While Mr. Jett was never charged criminally, Kidder blamed him in 1994 for $350 million in losses and dismissed him from the firm.

Mr. Jett maintained his innocence, and he still works in finance, serving as the chief executive of Jett Capital Management, according to its Web site. The site speaks proudly of his time at Kidder.

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FURIOUS
USA

But you know what, banks don't need regulations. They can police themselves.

If any organization leaves this much power in the hands of one person, and if that organization has been deemed too big to fail, I dare you to try and tell me you do not deserve to be regulated.

Sorry all you fancy bankers...you can explain it however you want.

In the end, you are nothing but gamblers who thing you have figured out ways to game a system that you cannot control or predict with anywhere near the accuracy you think you can.

Any yes, you have money, power and prestige. But you'll never get respect from people who do actual work, like creating music and art or teaching. To us, you are as shameful as a gambling addict trying one more time to rationalize why you "don't have a problem."



MOUSE WOMAN OF THE NORTHWEST COAST
WASHINGTON STATE

Why are traders called "rogues" when the financial institution loses money, but not when the entire nation gets destroyed? Why do they get arrested when their employer is hurt, but not when they wreck the economy?

Just askin'...



CHRIS
PEORIA, AZ

No need to regulate banks. Regulations just get in the way of their gambling for profits and big bonuses. And if the gambling doesn't work out, public funds are available to bail them out because they are too big to fail.

Any questions?



CHUPACABRE
TEXAS

Who gives a 31 year old person 2 billion dollars?




FANON
SF

But how can we make this the fault of teachers and unions?


SOCRATES
DOWNTOWN VERONA NJ

Alan Greenspan was wrong on many counts, but especially in his comments that "you can't regulate greed."

You can regulate greed with thoughtful public policy, enforcement of laws, and prison terms for the sociopathic narcissists who dominate Wall Street and the banking industry.

Banking used to be a respectable profession; it is now a disgrace because the industry got greedy and successfully bribed our Senators, Congressmen and President into repealing Glass Steagall.

Greed must be regulated.



MAURIZIO
NEW YORK

Would love to have been on the other side of that trade!




CITIZENBTV
VERMONT

The third law of thermodynamics applies fairly well to financial transactions. It's nice to think that money was destroy here, but in truth it moved from one bank to another. We know who the loser was. Who were the winners in this fiasco?



IBSTEVE2U
COMMONWEALTH OF PENNSYLVANIA

Gotta love the inference that shareholder value is going to take a hit, but not to worry: No clients got hurt.

The markets of the West have a two-tiered structure in place: Big money clients get to gamble and reap the majority of the rewards while every effort is made to shield them from loss by ensuring that only the money of retail investors, the shareholders, and/or the taxpayers is ever at risk.

And to think that it those same big money clients who anonymously fund so much of the right-wing propaganda that attempts to link any government action on behalf of the general citizenry with "socialism"...




MEMI
CANADA

"Derivatives in the foreign exchange market which are worth an estimated 4 trillion dollars a day"

There you have it. With that kind of money made simply by pushing it around, does anyone think the unregulated industry is benefitting anyone other than bankers, traders, and the already rich?

Wasn't the financial market created to service the greater economy? Why is THAT not a priority anymore? It seems the lenders aren't lending anymore. There is much too much being made by this kind of trading and regulating it will grossly interfere with its capacity to generate profit, which is against the law. Is it not? I know, we in Canada signed a free trade agreement that stipulates we cannot curtail the profits of any company that wishes to plunder our resources.

Why are we so afraid of bringing these crooks to their knees? Too big to fail? They don't do anything for almost 95% of us. They don't help anyone but themselves, so what's the worst that could happen? We regulate them, curtail their profits, stop buying into the notion the world will crumble if we don't let them do whatever they want, and take back our economies.

Trillions of dollars a day! How much of that is trickled down and how much do we at the bottom enjoy being trickled upon? Regulate this industry or face a revolution. That's the choice I see and I am not alone in my estimation.