Choose your trading platfom

Losing your Barings - lessons from the original rogue trader Nick Leeson

Losing your Barings - lessons from the original rogue trader Nick Leeson

In trading and markets, pain is a great teacher. So what does it feel like to lose everything?  To bring down a two-centuries old Merchant bank? The Artful Trader’s Michael McCarthy sat down with Nick Leeson, the original rogue trader whose unchecked risk taking caused the collapse of Barings Bank in the biggest financial scandal of the 20th Century. Nick Leeson describes the process of soul searching while in prison, rebuilding his life and how he now shares lessons about risk management to banks and corporations.

Nick Leeson

CMC Markets

Nick Leeson is the original Rogue Trader whose unchecked risk-taking and drive for success caused the collapse of Barings Bank - England’s oldest Merchant Bank and arguably the biggest financial scandal of the 20th century.

Nowadays, Nick Leeson is on the talking circuit and consults big banks about risk management, sharing the highs and lows from his life experience.

Episode 1: Losing your Barings - lessons from the original rogue trader Nick Leeson

Nick Leeson: It's definitely the most embarrassing period of my life, but if you can go through that transition where you've really taken yourself apart, you can then build yourself back up and you can move forward.

Michael McCarthy: From CMC Markets, this is The Artful Trader.

Michael McCarthy: Hi and welcome to the second season of The Artful Trader. I'm Michael McCarthy, Chief Market Strategist at CMC Markets Asia Pacific. Each episode, we'll hear the highs and lows from the industry's experts and hear their journey to mastering the art of the financial markets. Today we meet Nick Leeson the original rogue trader whose unchecked risk-taking, caused the collapse of Barings, the more than two-century-old merchant bank. It was considered the biggest financial scandal of the 20th century. Nick Leeson was a 28-year-old futures trader working on the Singapore exchange for Barings Bank. To hide a junior colleague’s mistake, he put the losses in an error account that became known as the five-eighths account. He tried to trade his way out of these losses on the Nikkei futures market. But then a huge earthquake hit the Japanese city of Kobe causing seismic losses on the Asian markets and sending Leeson's trading positions into a tailspin. The losses eventually reached $1.4 billion US dollars. Leeson fled Singapore leaving a note reading, I'm sorry. After seven months on the run, he was caught by police in Frankfurt and extradited to Singapore where he was sentenced to six and a half years in prison. Nick was released on compassionate grounds after four years when he developed colon cancer. Now, Nick Leeson is on the talking circuit and consults big banks about risk management. Speaking from Galway in Ireland, welcome Nick.

Michael McCarthy: Well Hello Nick, and thank you for joining us today on The Artful Trader podcast.

Nick Leeson: I'm looking forward to it Michael.

Michael McCarthy: Nick, I'd like to go right back to the beginning and start by asking you what your childhood was like and what did it teach you about money and success?

Nick Leeson: Success was always important to me. It was probably a thing that drove me on more than anything else. So going through my formative years at school, at junior school, I was always an overachiever. I would've always been top of the class. I wouldn't have been anywhere else and I would have been taking the exams that were a year ahead or two years ahead of where I was. So success was extremely important. I don't think money ever really entered into it. It was more success than anything else. I come from a very working class background. I grew up on a council estate in Watford, it wouldn't have been normal for a person from that sort of environment to go to work in the city of London at that time. But the real motivation for me and everything that I did was being successful.

Michael McCarthy: Right, and that certainly turned up in your early career?

Nick Leeson: Yeah, it did. And I think one of the things, I suppose when you look back at it after all of these years, and I do this on a number of occasions, I suppose I had a very exalted opinion of what success looked like. Success for me was being at the top of what I was doing, be that an organisation or anything else that I was doing at that time, making the important decisions. I didn't have a problem making decisions. You know, that thirst for success I suppose was coupled with what became a fear of failure, but I suppose during my early years it was because I didn't experience failure. So I think it's important to experience both. And mine was very much, you know, it was success after success after success, and that took me through to about the age of 23, 24 when I was working at Barings in London and then moving over to Singapore. And it was only really then at that age that I started to experience or encounter the first thing that I couldn't immediately cope with, and you know, that led to some really bad decision making and what became a fear of failure, but it probably didn't start out that way. It was just the fact that there hadn't been a great deal of failure up until that point.

Michael McCarthy: The dark side of the success coin. Now Nick, I know that was 23 years ago, while it is a big part of your public story, it's not the only part of your story. There's a lot more, and there's a lot more to your life than just the events of 1995. But in essence, the story is you, as a good boss looked after a junior employee who'd made an error, the error was around 20,000 pounds, which I guess would've been close to the annual salary of a junior dealer at that time. And in creating an error account and putting that loss in the account, you then went to try and trade out of the loss so that it can be zeroed out and nobody would be the wiser. The problem was the market didn't cooperate. The position went against you and to try and recoup those losses the position was increased. It got tougher and tougher and as the margin calls came in, you started selling options straddles on the Nikkei index to pay for those margin calls and this all came on unstuck on January 17th in 1995 when a 6.9 magnitude earthquake hit Kobe. Is that roughly the story?

Nick Leeson: Yeah, that's roughly the story. The Kobe earthquake for me personally is a little bit overdone in terms of its significance. It was an important event at the time because it sent the Japanese markets into a bit of a tailspin, but obviously we're talking to people who understand the markets. At that stage, my position was just increasing dynamically as the market was falling. It was totally unmanageable. I was out of control. There was nowhere really to turn and you know, like I can't remember what the exact numbers were and you might have them in front of you, but I was long something like 80,000 futures, I was short something like 100,000 straddles. So this is a position that you know, even with the best will in the world and the best IT, and the best systems would be very, very difficult to manage and I was trying to do it on the back of a piece of paper.

Michael McCarthy: Wow. I did actually do some quick numbers. I took some numbers out of your book, Rogue Trader, and just on the index position alone, I calculated at the time and at those exchange rates it was, the index position was equivalent of about $120 billion US. Does that sound about right?

Nick Leeson: I mean I'm not going to dispute it with you Michael. Yeah. Even for me, right now when you've mentioned the number to me, you know, that sounds difficult to compute. But for me it was all avoidance, right. I get a statement put on my desk which would show the position and I'd sit down and I'd try and work out about how I was going to try and unwind the position. But at some time in 1993, perhaps the beginning of '94, what was a 2-page statement was now 100-page statement and I didn't even want to look at it. So the girls would put it straight into the drawer, because that was my failure, that was my problem, and that statement, if you like, those pieces of paper where the announcement of my failure. So rather than look at it and try and work out what I was going to do, it was far easier to avoid it and just get it placed straight in the drawer and ignore it.

Michael McCarthy: Well, in trying to tease out some lessons for traders here Nick, I'm not trying to cause you pain. I understand this might not be easy for you, but I'd like to just touch on some points in that story. To start with, what made you initially open the five eighths account?

Nick Leeson: Well the five eighths account was always open Michael, as you know, going back to floor trading days, there's lots of errors. You know, there's a 100, 150 people in the Nikkei 225 trading pit at the time, everything's done by hand signals and eye contact. So if you can imagine 150 people in a room not bigger than maybe 10 meters in diameter. So, you know, people would think that they were trading with somebody and they were actually trading with the person behind, prices we're changing all of the time, so you might think you traded at four, the other person thought you traded at five. So there would always be discrepancies that needed to be reconciled during the day. And so typically, you know, 95 percent of those discrepancies would be reconciled on the spot. You'd have a runner who would go over, communicate with the other person's runner, and you would come to some form of agreement. Five percent of the errors wouldn't be reconciled and you'd have to either take a hit on it or take a profit on that particular discrepancy. So that was what the five eighths account was originally used for.

Michael McCarthy: So putting that in trade in there was normal course of business?

Nick Leeson: It was normal course of business in the beginning and then when the trades went back to London, which was the reconciliation vehicle, if you like, the settlements department in London and they were probably seeing 50 to 60 trades a day and then eventually the head of settlements just basically said we don't want to see the trades, we just want to see the net PnL. And that's where the avenue, I suppose for me arrived where it could be used for a different purpose. Not that that's what I was planning, but its use changed. And so when this occasion occurred as you said that we had the error, which was a reconciliation that we couldn't agree to, you know, maybe at 3.00 or 4:00 in the morning, the trade went into what then became the illegal five-eighths account. So it wasn't born out of the error because it already existed, but it's purpose changed then at that particular point.

Michael McCarthy: It's a fascinating story. More from Nick Leeson in a moment. This is The Artful Trader, uncovering the highs, and in Nick's case, the lows to mastering the art of the financial markets. If you missed it, last series, I sat down with trading veteran Linda Raschke, who's been in the game for 36 years. She's developed a training regime that would make even an elite athlete break into a sweat.

Linda Raschke: Staying in that moment and concentrating and having complete focus, it's a single-mindedness.

Michael McCarthy: You can hear Linda and all of our previous interviews at theartfultraderspodcast.com. Now back to my chat with Nick Leeson in Ireland.

Michael McCarthy: When did you first start to worry and what was that like?

Nick Leeson: You worry from the first minute that you do it right, because, you asked me about my childhood at the beginning. You know my childhood was pretty much like everybody else's I would imagine, you know the difference between right and wrong, and this was wrong. I worked for three banking organisations. When I left school I worked for Coutes, which is the Queen's Bank, where the Queen and the Royal Family have their money. I then went to work for Morgan Stanley, so I was headhunted to Morgan Stanley. Really good organisation, very well run, very well controlled, and then I was headhunted to Barings to head up their Japanese futures and options area. Barings and Morgan Stanley are chalk and cheese. Barings was everything that Morgan Stanley wasn't. It didn't have strong controls. It was very aggressive in the way that it approached the markets. Very profitable. But the controls and the way that they looked after the business, everything was trying to catch up with the amount of business that they were doing, and at Barings, there were of errors and you know, one of the things that I often say is I might have been the last person to put a trade into an error account at Barings, but I wasn't the first. And the problem with that, and it's true of any business, not just the financial organisation, but any business, if a behaviour is wrong, it's always wrong. You can't create situations where that behaviour is okay that time. So I constantly saw people putting trades in error accounts, holding them for a couple of days and then closing them out, you know, break even, sometimes making a small profit. And if you allow that to occur in any organisation and you even condone the behaviour, but you don't deal with the behaviour when it happens, people see it, people hear it. And so when it becomes your time to put a trade in an error account, it's not that big step that it should be because you've seen so many other people do it. And that's the problem. I mean a lot of the issues that we've seen in financial markets over the last 23, 25 years can be narrowed down to people's behaviour, people's conduct, and if you have a culture or conduct where somebody turns a blind eye, then it's likely that that behaviour’s going to occur again.

Michael McCarthy: I mean, clearly in this situation, there's a structural risk management issue and with the benefit of hindsight, many banks have learnt from this episode, and clearly the separation of back office and front office functions was a structural issue here. Do you think in some ways you were scapegoated for others failures?

Nick Leeson: No, I don't think so. I mean, I think you go through a long; I was in prison in Singapore for a total of, between Germany and Singapore, I was in prison for a total of four and a half years. You take a long time at self-reflection, looking at yourself, the things that you did, trying to understand why you made some of the decisions that you did. I'm definitely not a scapegoat. I mean I took all of those trades. I took on all of the risk. There was every likelihood that it would have happened at some stage. But no, I'm definitely not a scapegoat.

Michael McCarthy: Nick, I promise you we'll move on soon, but could you just talk us through how it all came unstuck and how you were feeling as that happened?

Nick Leeson: From the beginning, from the moment I first put something into the illegal five eighths account, I expected a knock on the door every minute of every single day. I mean the Treasury Department in London over this period sent me nearly 650 million pounds on a bank that has a capital base of 250 million pounds. We had two accounts in Singapore, we had a London account, we had a Tokyo account. You compare it to the Singapore international monetary exchanges records and there would be a discrepancy every single day for three years, and that discrepancy is my illegal five eighths account. But nobody did the reconciliation. So these are really basic things that happen at least once a day in most major banks, probably far more often now than that once a day scenario. But simple reconciliations weren't done. So you live in constant fear that you're going to get that knock on the door. And then strangely what happens when you don't get the knock on the door for a period of time is, you get a little bit more, not comfortable with the situation, but you get more confident that you have a little bit more time to correct the situation. So then you start thinking in terms of weeks and then the months, but the auditors are going to come in. So the external auditors, and then they come in and they don't ask difficult questions and I'm the point of referral. So it's easy to divert them around a different path. Now, at the end of 1992, there was a $5 million loss in the five eighths account and I hadn't hidden it. And on the last day of the financial year, I just phoned up the Treasury Department in London, I asked them for $5 million. I told them it was because the exchange was looking for additional margin because of the volatility in the markets, which had a semblance of truth, but wasn't truthful at all. The money came in the day after the year-end, and when the auditors came in, they saw that there was an intercompany balance difference of $5 million and it's part of the audit records from that time, it was put down as a foreign exchange discrepancy. And then fast forward into 23rd of February, 1995, they sent somebody over from the settlements department in London, I think he set foot in Singapore at the beginning of February. And on that 23rd day he did a reconciliation, right, he should have done it on the first day that he got there, and lo and behold, there's a huge discrepancy of 100,000 futures, 60,000 options, which dwarf the remainder of the position. And he came to me and said, look, I'd like you to explain this discrepancy. There is no explanation. So that was the day that I hightailed it out of Singapore and could've made my way to Australia. But unfortunately I decided to go the other route and try to get back to Europe.

Michael McCarthy: So the jig was up, it was clear, it was all going to come out. What did that feel like? Was it relief? Was it disappointment? Was it, what was it?

Nick Leeson: Well, you go through a strange set of experiences to be honest with you. I mean the first one that kicks in is the classic fight or flight type of scenario. And for me, you know, the first thing that kicked in is pure self-preservation, and you really don't know quite how calamitous your actions are. I'm not even sure that I completely computed at that time that I was going to go to jail. I didn't know that the bank was only worth 250 million pounds. So I knew that there was going to be a significant impact, but I didn't know that it was going to be quite as bad as it was. But the first thing was I needed to get back to an environment where I could protect myself and I could protect my wife, and it really was just a case of trying to get my wife at the time back to an environment where she'd be safe and then for me to start to face the music. So it wasn't really until I got back to Germany that, you know, that you start to experience a bit of relief that it's over, but then you're faced with another battle because, you know, I've never spent a day in prison and I'm about to spend a lot of time in prison and work out how you're going to get through that period. And it's tough.

Michael McCarthy: How did you prepare for gaol?

Nick Leeson: Well, I mean, there was no preparation because I was just thrown into it. I didn't have any lead time. There's nothing to do. I mean, you have Gurkhas who guard the walls with guns. I was in maximum security. I wasn't in Changi, which would have been an older prison. So I was in a place called Tanah Merah, which is next door to it, very high control over what you do. You're locked up for 23 hours a day. The walls are pristine white. If you write on them, you're punished quite aggressively. So you sleep on the floor, the floors very rough and uneven. There's three people to a cell. A cell is six foot by nine foot. You're allowed three books a month and it's extremely hot. You know, it's not just the psychological difficulty and the boredom of being in Singapore, the heat and the pressure of the heat adds to that. Everybody's a triad gang member. There's not a great deal of violence. The one thing that I will say about the prison system in Singapore is that it is safe, because they have so much control. I mean, there are high response units that are on constant standby. If there is a gang clash there in that prison, within 60 seconds with big sticks and however violent the clash was, you rest assured they will put it down more violently and a lot of people will be carted off to the punishment cells and you wouldn't see them for a long period of time.

Michael McCarthy: Nick, how did the other prisoners regard you?

Nick Leeson: I was a hero.

Michael McCarthy: Right, you'd taken on the system?

Nick Leeson: Yeah. Well No, I think it was even more ridiculous than that. As far as they were concerned, they thought I stole $2.2 million and got away with it.

Michael McCarthy: And that was enough to make you a hero?

Nick Leeson: Well, I was like an Uber criminal to them because they were doing, they were selling a few joints or a bit of weed and were getting banged up for five years. I was misappropriating $2.2 billion and I got six and a half. So one of the best questions I was asked at a boardroom at one of the banks was, what made you successful working in the organisations that you did? And the answer would be that I was extremely socially adept, you know, I come from a very working class background and my friends were all, you know, it'll be repairing cars, delivering post, so I'd be socialising with those people, and I would then be working during the day with somebody who's just fresh out of Eaton or has just got a first out of Cambridge University. And I could flip between the two lifestyles fairly easily. And it was exactly the same in prison, you know, I was able to mix within the prison. I'm probably still to this day the only person in Singaporean or the history of the Singaporean prison service who has never had to be, or forced to join one of the triad gangs.

Michael McCarthy: Okay. Well they clearly held you in high regard. But Nick how did prison change you?

Nick Leeson: It changes you in lots of different ways. I mean, I think anybody who says that it doesn't change them is just trying to avoid the situation. I think the big thing for me and the big positive was I kept a diary every day, looking at things that I did, trying to ascertain how I should have behaved, you know, the right decision that I should have made and it's really through that hard-hitting self-reflection, it's a cliché, it's about looking at yourself in the mirror, really looking at the good parts, the bad parts, admitting to them, acknowledging them, and then from that point you can move forward. I think if you don't go through that process, it's impossible to move forward or your life continues as a lie, but if you really get down into that, you know, that real grimy detail of what you did and what you where, you come to the conclusion that you didn't particularly like the way that you acted in certain situations or the person you became. So you try to change those parts of you going forward. I think, you know, like it's important, I think it's important for everybody to have self-esteem. You know, that period of my life is definitely the most embarrassing period of my life. But if you can go through that transition where you've really taken yourself apart, you can then build yourself back up and you can move forward and you know, that means I can stand on a stage, I can talk to large audiences and if somebody wants to have a go at me, that's fine. You know I'm not immune to people coming to events that I do without some people being negative, but rest assured, I can defend myself and I'm comfortable and I'm confident in my defence. If somebody highlights something that clearly I did wrong during that period, I'm the first one to admit it. So that comes through that process in prison. The other thing that was important to me and is still an important way that I lead my life at the moment, and it's quite simple. You know, we used to have a prison guard every morning that would come round and he would turn the water on at 7:00 in the morning and he would then come back at 8:00 and turn it off. That was your water for the day. So you can imagine you're woken up at about 6:00 AM in the morning, it's hot, starting to get oppressive, you start to think negative thoughts as you all do. That starts to get you into a negative spiral. That's accelerating as you go downwards and then the guard comes past and you can see him turn the water on behind your cell and then there's no water. Alright, so the water doesn't arrive because of the overcrowding, so it goes to Cell Block A before it goes to Cell Block E and I'm on E. And then at 8:00 he'd come back and turn it off. It used to drive me absolutely crazy and I'd be like a coiled spring in that cell, ready to jump out, grab hold of the guard and wreck him as bad as I could as soon as he opened that door. And then eventually you realise that the only person that you're upsetting is yourself. He's got a job to do and he's going to do that and he's going to do that to the best of his ability and he's going to go home at 5:00 and probably go for a few beers and have dinner with his wife and whatever else. And never think about you again. So the only person you're upsetting is yourself. Once you get to that mindset, and this is the way that I characterise it, there's things in your life that you can influence and there's things in your life that you can't influence. The things that you can't influence, just forget about, don't worry about them. Focus on the things that you can influence. So that's how I live my life these days, you know, that's the way I think about things. If somebody hits my car, you know, the natural instinct is to get upset, you know, and then people would go over and over this process for the next day, the next week and whatever else. But it's not going to change things, you know, it's a car, you know, there are other things that you can focus on to improve your life rather than getting upset.

Michael McCarthy: Well it's an interesting parallel with markets, isn't it? I mean, as traders, we can't change the market. The only thing we can do is change the way we act in it?

Nick Leeson: Exactly. And, yeah, I mean markets are going to be irrational from time to time and nobody can explain them and their irrationality is going to outlast your solvency and so you do need to change and adapt and it is about constantly changing and adapting.

Michael McCarthy: Nick, all you have told me so far reminds me of that old saying when you're going through hell, just keep going, What were the traits that allowed you to survive gaol? Was it stubbornness, persistence, resilience?

Nick Leeson: To a certain degree, I think it's some of the things that got me into trouble as well, so that stubbornness. You know I was diagnosed with cancer whilst I was in prison in Singapore. So I spent some time in the punishment cells. I was in the punishment cells for 31 days. I came out, I'd lost a lot of weight and then I started to experience a lot of pain in my stomach. They diagnosed me as having a low red blood cell count and they were trying to treat that by giving me iron tablets, but eventually through various different methods I ended up in a hospital outside of the prison and they diagnosed me with colon cancer and then I had an emergency operation to remove a third of my colon, I'm sent back to the prison and they wanted to give me chemotherapy. Everybody expected me to be sick during the chemotherapy. And it was more a case of fairly soon after having the operation I was back outside exercising, doing some stupid pull ups and push ups and stuff, which was basically my way of saying to them, you know, whatever you may think, I'll get through this. And so I don't know if that's the British stiff upper lip or whether it's just stubbornness again. But, you know, it's important as traders I suppose to.

Michael McCarthy: It’s a fine line?

Nick Leeson: Yeah, you need to be disciplined, you need to be structured. And I mean I still trade market's Michael from a personal perspective and still, you know, taking that loss and pulling that trigger, still comes tough, and you know like I've got a background which should make me very proficient in doing that. And even to this day I tend to allow the trade to run to the extent of the stop rather than taking a loss early.

Michael McCarthy: Nick, I'm fascinated to hear that. I actually had that as a question to ask if you had traded since then. You're clearly still trading. I know traders don't like to talk about the actual positions they have, but would you mind sharing with our listeners what markets you trade?

Nick Leeson: I trade markets that are live in my time zone. So I'll trade FTSE, I trade DAX, I do a little bit in the DOW in the afternoons and then gold because gold, 23, 24 years ago, gold use to move $2 on a day and it wouldn't move $10 in a year and you can see nice $15, $20 moves on gold at the moment if you get it right. And then the two local currencies are Euro and Sterling. So probably six markets.

Michael McCarthy: And so Nick now you're on the talking circuit and one of the main themes that you discuss is risk management and risk intelligence. What should banks and financial organisations be doing now?

Nick Leeson: Well, I mean first off, I think banks and financial organisations have improved significantly since 1995. I think, where you have a problem within a financial organisation, it's always in the human realm and whether that's an oversight or that somebody's doing wrong, it is in that environment. So if you can take some of that out by using technology that does that analysis for you, and is really challenging what's going on within the organisation, but it is about challenge, you know, I was never challenged throughout the three years that I was in Singapore. Nobody asked a sensible question. Sometimes people find it hard, when you think of financial organisations, people kind of get stuck in those mid-management roles where they're getting paid a really good salary, they can't get a comparative salary in any other industry and they don't really want to rock the boat. And we need some people who rock the boat and ask the difficult questions from time to time. I did an event in the city of London in Barbican about a year ago, and it was to a group of Treasury professionals. And at the end of the meeting I was standing around having coffee with some of the people, and one guy came over to me and he was in a reasonably senior management position within the Treasury Department at the bank, and it was a large bank, and he said to me, there's a real problem at our Bank. I'm really concerned about something. I've got an email. It's been in my outbox for a period of time now I want to send it to the CEO. What would you advise? And my honest answer was, look, I don't know the circumstances, so I can't comment on that. But my piece of advice would be something that I feel very strongly about. You know, you'll get another job, you won't get another reputation. So try to do the right thing. You know, like I for one will never forget that period and the impact of it, and the fact of how embarrassing it is. I mean, there's no way I can sugar coat it.

Michael McCarthy: Now Nick, at the moment the Australian banking and finance industry is currently undergoing a royal commission. There's a huge amount of scrutiny around misconduct. What could we learn from your situation?

Nick Leeson: Misconduct is a big theme around the world. Wherever you look at something going wrong within any organisation, it's not just banking, it comes down to conduct. The type of things that we try to bring to the fore is, you know, banking has always been about KYC, know your customer. We like to think about KYP, so that you know your people, you know what your people are capable of, what they're doing and you understand that. I was surrounded by people that could have helped me and I didn't do a really simple thing and that simple thing was ask for help and advice, because if I'd done that, I would've been steered down a different route and the whole story would have been very, very different. I was 25 years old, I thought I could cope with anything. Unfortunately as the story tells us, when we fast forward to 2018, I couldn't, and in not asking for help and advice, I made some really, really bad decisions. But genuinely everybody's surrounded by people that can help them. Communication within organisations, banking and otherwise needs to improve, because people don't naturally bring their concerns and problems to the table. The other simple piece of advice that a good friend of mine who's a chief executive of a major European bank uses is when new people start at his bank, he tells them about my story, but then what he tells them is that he doesn't encourage them to make mistakes, but he says, or he tells them that he knows that they will make mistakes and he encourages them to come and talk to him or the appropriate people about those mistakes. What he tells them they can't do, is hide those mistakes. I think one of the problems that banking has is that a lot of the culture and the conduct is ingrained in the system and it gets passed down. The sooner we can eradicate some of those, the safer the environment will become.

Michael McCarthy: I'd like to just finish off on a personal note. You said as a young man, success was the key to everything, yet you'll be remembered from one of the largest trading losses in history, I mean thank goodness for Jerome Kerviel, but what does success look like to you now?

Nick Leeson: It's a simple thing really and after I'd completed the psychology degree, I wrote a book called, “Back From the Brink” with a reasonably well-known psychologist in the UK. I speak about my need for success. He took that slightly differently. He saw it as a need for status. And then during your business career, you build up status relationships with your family, with people that you work with, people that you work for, and he ends the first chapter with a phrase which says, 'when an immature person has status, they will do anything, absolutely anything to protect it'. And to a certain extent that embodies what success looked like for me at that time, and it kind of tells the story, but in terms of what success looks like now, you know, he taught me some simple things. For some people putting food on the table for your children to eat is success. So it's a million miles away from where I was when I was at the top of the organisation making the important decisions. But it's still success.

Michael McCarthy: That was Nick Leeson. For more information about Nick, you can go to his website at nickleeson.com. For previous episodes of The Artful Trader, and more information about CMC markets, head to our website, theartfultraderpodcast.com where you can also access some limited time offers. Make sure you don't miss an episode, subscribe free in your favourite Podcast App. The Artful Trader is an original podcast series by CMC markets, a global leader in online trading. The information in this podcast is general in nature and does not speak to your personal financial situation. I'm Michael McCarthy. Thanks for listening. This is The Artful Trader.