British rogue trader repents

Today, Nicholas Leeson is making a living by speaking about his notorious past

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December 29, 2006|By New York Times News Service

GALWAY, Ireland -- As an unsupervised young chief trader in Singapore in 1995, Nicholas W. Leeson lost $1.3 billion in frenzied trades in Japanese stock futures and bonds, destroying his employer, the 233-year-old Barings Bank, which had Queen Elizabeth II as a customer.

Now, Leeson, having served four years in prison and survived a bout with colon cancer, has managed to turn those money-losing bets into a money-making enterprise - warning bankers of their continuing vulnerability to rogue traders.

The paradox is that he is earning a very good living from a notorious past, getting 5,000 pounds ($9,800) a speech.

In November, he spoke at an annual dinner of financial regulators in London's financial district and then headed to Amsterdam for a speech to a large firm of auditors.

The previous month, he gave a presentation at a Dublin function on banking scandals, arguing that he should have been stopped by Barings at an early stage. The British bank, he says, was culpable for failing to supervise him and for accepting the bluster of a young trader who was prepared to disguise his trading losses.

Leeson, now 39, has recently been freed from an agreement in which he surrendered some of his earnings to the liquidators of Barings, which was sold to ING of the Netherlands. For over a decade, the liquidators had sought to recover money for creditors of the ruined bank.

Seated in a coffeehouse close to the Galway seashore, he still looks every bit the chief trader, dressed in pinstripes.

"I suppose it embodies more where I am now in life and the changes I have been through in the last 15 to 20 years," he said about his new start in the west of Ireland. "Life is a little bit more slow-paced, but there is a quality of life which was possibly missing when I was in Singapore, when it was all about succeeding. I am more happy now."

He spoke of his new day job as general manager of Galway's soccer club, in which he is responsible for everything from shirt sponsorship to planning for a potential redevelopment of the club's stadium.

"There's a sea change in the way the club is run today," he said in a softened London accent. His new home, with its large college student population and prosperous computer and tourism industries, has a reputation as Ireland's summertime party town.

Leeson, who grew up north of London in a working-class family, left school at 18 but managed to land a job in London's financial district in 1985, when the economy was booming. He joined Barings in 1989 as a back-office clerk but did well enough that he was offered a job in Singapore.

He continued to advance, landing a trading job. His successes led to a salary and bonus that was reportedly more than $1 million a year in the early half of the 1990s. But at some point, Leeson began taking what amounted to a gamble on the direction of Japanese stock prices and interest rates - a gamble that began to go wrong early in 1995.

By the end of February, Barings had collapsed under the weight of more than $1 billion in losses. In December, Leeson pleaded guilty to two criminal charges that he had illegally covered up his trading losses and was sentenced in Singapore to six and a half years in prison.

But after serving a little over half that prison sentence, he was released in 1999, and offers began to flood in. He did a string of television commercials, including one for a Swedish stock brokerage firm, and was paid $100,000 for an appearance before an audience of Dutch bankers and brokers. "Half went to the liquidators, half to me," he said the other day.

He also wrote a book, Rogue Trader, while in prison that was later turned into a movie.

He said he believed he had picked the opportunities wisely. "It's one of the things I have done reasonably well since I have been released," he said. "I don't do everything that is offered me."

He is still in touch with some former colleagues in Singapore but is banned from returning to the country. He laughs when asked about his slim prospects of ever working for a bank again.

He mentioned that he still trades currencies - mostly the dollar against the British pound and the euro - through an account at an online brokerage firm. This time, he says, he feels confident in his trading decisions, contending that he was "ill-disposed" to knowing his limitations 11 years ago.

Speaking in mid-November, he confidently predicted that the dollar had further to fall against the pound and euro.

"If I am risking my money it should be OK," he said. "If I were employed by a bank, it would be a different matter."

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