FOREX DISASTERS
Despite the plethora of brokers attempting to persuade you that forex trading is easy it is estimated that 95% of all day traders are losing money The large institutional traders lose money on occasion Usually in much the same way day traders do attempting to recover an initial loss quickly by using a high leverage and speculating heavily Most banks claim the traders concerned were acting on their own without authorization from the bank themselves Unsurprising really if the bank makes money it was authorized if they lose it was the result of rogue traders heads roll metaphorically and everyone moves on except the unlucky trader who may or may not get to spend a few years in prison and become a successful author based on the publicity
Here are few foreign exchange trading disasters that have been in the news over the last few years Far be it for me to suggest that most banks forex losses are quietly covered up and forgotten ☺ These are the ones that were too big to sweep under the rug
National Bank Australia 2004
National Australia Banks investigation in 2004 into unauthorized currency options trading disclosed losses of $360 million Two of the four foreign exchange dealers allegedly responsible pleaded guilty in court after Gianni Gray confessed to three counts of dishonesty Mr Gray who worked for NAB in London had previously been awarded a bonus of $85 000 in 2003 for his part in earning bank profits that were later discovered to be false Luke Duffy the head of the currency options team pleaded guilty to three counts of dishonesty and was sentenced to 29 months jail with a minimum of 16 months after he agreed to cooperate with the Commonwealth Director of Public Prosecutions Mr Duffy handed back his $129 000 performance bonus to the bank prior to sentencing The two traders most heavily involved in the disaster David Bullen and Vincent Ficarra were sentenced to 44 and 28 months jail respectively
Allied Irish Bank 2002
AllFirst Financial a subsidiary of Allied Irish Bank Irelands second largest bank lost US$750 million on foreign currency options trading when its trader John Rusnak systematically falsified bank records and documents to hide losses from speculative trades
Rijecka Bank 2002
Croatias third largest bank lost US$100 million nearly 75% of the banks capital in March 2002 when its currency dealer Eduard Nodilo indulged in unauthorized foreign exchange trading to hide past losses German bank Bayerische Landesbank sold its 59 per cent share in Rijecka Banka to the government for a symbolic price of US$1 shortly afterwards
AgriBank and Incombank Vietnam 2007
Vietnamese government inspectors blamed the central bank for losses incurred by two staterun banks that carried out foreign currency deals with Dutch bank ABN Amro
The inspectorate found that State Bank Governor Le Duc Thuy would take responsibility for major losses suffered by Agribank and Incombank in the course of foreign currency trading
Police last year blamed losses incurred by Incombank on ABN Amro and detained or jailed four of the Dutch banks staff who were only freed after the foreign bank paid $4 5 million
ABN Amro has consistently denied claims that it was to blame for losses incurred by Incombank the Industrial and Commercial Bank Police had also blamed ABN Amro for losses at the Bank for Agriculture and Rural Development Agribank The government inspector said that the SBV had failed to tighten supervision of the interbank foreign currency market and mistakes were not corrected immediately once discovered nor were the staff involved strictly punished
Despite the plethora of brokers attempting to persuade you that forex trading is easy it is estimated that 95% of all day traders are losing money The large institutional traders lose money on occasion Usually in much the same way day traders do attempting to recover an initial loss quickly by using a high leverage and speculating heavily Most banks claim the traders concerned were acting on their own without authorization from the bank themselves Unsurprising really if the bank makes money it was authorized if they lose it was the result of rogue traders heads roll metaphorically and everyone moves on except the unlucky trader who may or may not get to spend a few years in prison and become a successful author based on the publicity
Here are few foreign exchange trading disasters that have been in the news over the last few years Far be it for me to suggest that most banks forex losses are quietly covered up and forgotten ☺ These are the ones that were too big to sweep under the rug
National Bank Australia 2004
National Australia Banks investigation in 2004 into unauthorized currency options trading disclosed losses of $360 million Two of the four foreign exchange dealers allegedly responsible pleaded guilty in court after Gianni Gray confessed to three counts of dishonesty Mr Gray who worked for NAB in London had previously been awarded a bonus of $85 000 in 2003 for his part in earning bank profits that were later discovered to be false Luke Duffy the head of the currency options team pleaded guilty to three counts of dishonesty and was sentenced to 29 months jail with a minimum of 16 months after he agreed to cooperate with the Commonwealth Director of Public Prosecutions Mr Duffy handed back his $129 000 performance bonus to the bank prior to sentencing The two traders most heavily involved in the disaster David Bullen and Vincent Ficarra were sentenced to 44 and 28 months jail respectively
Allied Irish Bank 2002
AllFirst Financial a subsidiary of Allied Irish Bank Irelands second largest bank lost US$750 million on foreign currency options trading when its trader John Rusnak systematically falsified bank records and documents to hide losses from speculative trades
Rijecka Bank 2002
Croatias third largest bank lost US$100 million nearly 75% of the banks capital in March 2002 when its currency dealer Eduard Nodilo indulged in unauthorized foreign exchange trading to hide past losses German bank Bayerische Landesbank sold its 59 per cent share in Rijecka Banka to the government for a symbolic price of US$1 shortly afterwards
AgriBank and Incombank Vietnam 2007
Vietnamese government inspectors blamed the central bank for losses incurred by two staterun banks that carried out foreign currency deals with Dutch bank ABN Amro
The inspectorate found that State Bank Governor Le Duc Thuy would take responsibility for major losses suffered by Agribank and Incombank in the course of foreign currency trading
Police last year blamed losses incurred by Incombank on ABN Amro and detained or jailed four of the Dutch banks staff who were only freed after the foreign bank paid $4 5 million
ABN Amro has consistently denied claims that it was to blame for losses incurred by Incombank the Industrial and Commercial Bank Police had also blamed ABN Amro for losses at the Bank for Agriculture and Rural Development Agribank The government inspector said that the SBV had failed to tighten supervision of the interbank foreign currency market and mistakes were not corrected immediately once discovered nor were the staff involved strictly punished
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