I was invited to contribute to The Banker’s recent article on rogue trading. What distinguishes this piece is that three of the most widely known perpetrators of rogue trading, Nick Leeson, Kweku Adoboli and Jérôme Kerviel, are all quoted extensively and in their own words.
Leeson, who was sentenced to six and a half years at Singapore’s Changi Prison for charges of cheating and forgery, spoke directly to The Banker. Reflecting on his experiences with Barings nearly 30 years ago, he maintained that the world of banking is in a much better place today with substantially improved risk and compliance capabilities. Adoboli and Kerviel recounted how institutional pressure and incentive structures had ultimately shaped their actions.
The three individuals operated at different times and in very different banks and jurisdictions, yet what emerged is a recurring pattern. First, a losing position arises and this is followed by fear of failure. Temporary concealment then escalates the pressure and this leads to a sequence of events where, ultimately, the institution, and not just the trader, is obliged to absorb the whole cost often at significant reputational expense.
In my contribution to the article, I argued that this persistence is structural rather than accidental. Rogue trading arises from features embedded in the way many large banks are organised. Aggressive revenue targets, asymmetric reward systems and a front-office culture that, in many institutions, still outranks risk control functions create an environment where downside risk is socialised but upside reward remains concentrated. That asymmetry distorts judgement under pressure and weakens the internal challenge that governance frameworks are designed to provide.
What this article captures, and why it deserves attention, is the fact that rogue trading is not a historical anomaly and the underlying dynamics have not really changed. The tensions between revenue generation and risk control remain, and the real test for banks is not whether rogue trading can be prevented entirely but whether governance and culture are strong enough to surface the problems before it is too late.
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