Leeson's Gamble: Barings Bank Collapses

Nick Leeson, a 28-year-old derivatives trader based in Singapore, single-handedly destroyed Barings Bank, Britain's oldest merchant bank, by accumulating .4 billion in hidden losses through unauthorized speculative trades on the Nikkei 225 index. Leeson had been doubling down on losing positions for over two years, hiding the losses in a secret error account numbered 88888. His superiors in London never questioned why a supposedly risk-free arbitrage operation was generating huge profits while simultaneously demanding massive cash infusions. When the Kobe earthquake struck Japan on January 17, 1995, the Nikkei plunged and Leeson's positions became catastrophically underwater. He fled Singapore on February 23, leaving a note that read 'I'm sorry.' Barings collapsed on February 26 and was sold to ING for one pound. Leeson was arrested in Frankfurt, extradited to Singapore, and sentenced to six and a half years. The bank that had financed the Napoleonic Wars was destroyed by one unsupervised trader.