For many, the exchange is a place where you can suddenly get rich, you just need to put on the right “horse”. Meanwhile, experts argue that playing in stock markets is a very risky phenomenon. Losses here can amount to more than one million dollars, while usually they lose not the players themselves, but investors of those funds whose interests they represent. Below, we will tell you about the ten largest exchange losses. Perhaps, these stories will warn some naive players from easy profit.
Nick Leeson, a loss of 1.3 billion dollars.
Nick was one of the most famous “ruger” in history. In 1992, Leeson was only 28, but the rising trading star has already become known in narrow circles. The young man was lucky, it allowed him to become even the head of the operational department of Banking “Banking”, presenting it on the Singapore International Currency Exchange. However, the actions of Leeson brought the bank a huge loss. Nick launched into independent speculation futures and options Nikkei, hiding them for a long time on his own secret account. A turning point in the fate of young talent came when he put the “short-straddle” on the Nikkei. Such actions caused an effect similar to an earthquake – the Japanese index collapsed the next day. Leeson had no choice but to try to win back, while making more and more risky bets. He risked, of course, by other people’s means. Such actions inevitably led to even greater losses. Is it any wonder that the trusting bank “Barings” announced in 1995 about its bankruptcy? The financial institution, which lasted 230 years, was eventually sold for just 1 pound, a symbolic price. Nick Leeson himself after the flight was still arrested and was sent to Singapore prison, where he spent 4 years. The man was released in 1999, after his health was shaken. At large, the former trader became the author of the bestselling “Aggressive Trader”, in which even a movie was shot. Only then did the author pay all the fees to the bank’s creditors. Now Nick Leeson gives a lecture, receiving royalties of not less than 100 thousand dollars. Businessmen are ready to pay 300 dollars to listen to the legendary financial swindler.
John Rusnak, a loss of 691 million dollars.
The American branch of the largest bank of Ireland, Allied Irish Bank, in 1993 hired John Rusnak at work. This currency trader, Allfirst Financial, since 1996, began to make very risky operations with the Japanese yen. Naturally, Rusnak had to play a double game. He himself was a quiet, inconspicuous family man. But for his work, John had to use false names and documents. This helped him to hide from the partners growing financial losses, in particular for the Japanese yen. In 1997, Rusnak’s losses amounted to 29.1 million, but appetites grew, in 2001 John had already lost 300 million. Rusnak had little to hide his losses, he also forged and reporting, which optimistically said that the bank continued to make a profit. As a result, the resourceful trader for his “successful” operations received a bonus of $ 433 thousand dollars. The last straw was the loss of 300 thousand dollars in transactions with options. At that time, the total loss amounted to 691 million. Rusnak was sentenced to imprisonment for 7.5 years, and the court sentenced him to pay the entire amount lost by the bank as a result of fraud. The FBI called Rusnak’s fraud “the largest banking falsification in the US in the last decade.”
Yasuo Hamanaka, a loss of 2.6 billion dollars.
Yasuo Hamanaka received nicknames “Mr. Copper” and “Mr. 5% on account” for his activities. He worked as a trader of the Japanese company Sumitomo Corporation. She specialized in copper trading, being one of the largest wholesale suppliers in the country. Sam Hamanaka subsequently stated that at a certain stage of his career, all the transactions that he conducted amounted to 5% of the world’s operations with this metal.Yasuo was an average-time office manager – he got to work on the train, shared the office walls with nineteen the same as he employees. Only here the Japanese liked to stay at work for a long time. Hamanaka conducted his financial machinations from 1986 to 1996, their scale indicates that he hardly acted independently. Most likely, there was participation in a large-scale conspiracy, which allowed to change the quotation levels. Hamanaka bought up copper contracts, thereby organizing an artificial excitement and high prices. The scam was revealed in 1996, the swindler was sentenced to 8 years in prison. The investigation found that the swindler was also engaged in forging the signatures of other traders, thus hiding his losses. When the market learned about Yasuo’s tricks, copper prices worldwide fell by 15%! As a result, the Japanese left seven out of eight years and is now at large.
Liu Chi-Bin, an approximate loss of 1 billion dollars.
And this trader was engaged in metals. According to some reports, he worked for the State Reserve Bureau of the Republic of China. Glory to Chi-Bin brought his big bet on the fall of copper quotations on the London Metal Exchange (LME). The Chinese decided to purchase 200 thousand tons of copper, which exceeds the stock of this whole stock exchange and is comparable to the total copper reserves in his country. This intention significantly changed the growth of metal quotations. The unlucky player had only to leave England hastily, failing to fulfill his obligations under the contracts. The situation calmed down only thanks to the Chinese authorities, which hastily began to reduce quotes. They achieved this by telling investors about the volume of state reserves 5 times more than previously known. At the same time the authorities in every possible way denied their relationship with Chi-Bin. He allegedly acted at his own risk and therefore he himself must be responsible for all losses. Experts also believe that the sharp rise in price of copper futures could be used by those who stood behind the trader. They were the ones who could get the maximum profit on the wave of excitement. China hides any data related to Liu Chi-Bin, so the damage can only be estimated approximately. And the location of the swindler is still unknown.
Brian Hunter, a loss of 6.5 billion dollars.
Canadian Brian Hunter led the trader in the hedge fund Amaranth Advisors. The man decided to play on raising the price of natural gas. In 2005, hurricanes Rita and Katrina unexpectedly hit America, as a result of which futures for blue fuel jumped in price three times! This allowed Hunter to even get into the prestigious rating of the most honorable traders in March 2006, having occupied there the 29th line. Only soon the threat of hurricanes significantly decreased, and an incorrect market assessment by Hunter brought Amaranth advisors losses of 6 billion! The company fired a trader-loser. Later, the authorities conducted investigations that eventually established the guilt of the trader, who unfairly tried to influence the market prices of fuel. As a result, Hunter was awarded a fine of $ 30 million. His attempts to organize his fund for doing business were stopped by the authorities, which forbade a dubious player to appear on the stock exchanges.
Jerome Kerviel, a loss of 7.1 billion dollars.
On January 26, 2008, the financial police of Paris detained a man who, shortly before, had brought down world markets. He was the trader of the big bank of Europe “Société Générale” Jerome Kerviel. The reason for the arrest was the disappearance of 7 billion dollars from the bank’s accounts! Kerviel began work in the bank since 2000, immediately after graduating from the university. Two years later he is an assistant to a trader, and since 2004 he has already begun to conduct his own bidding. The inconspicuous player was engaged in futures of the European stock indices, he just had to predict with simple tools whether they would go up or down. The level of the trader was not so high as to make risky or high stakes.But Jerome learned to deceive the control system by creating fictitious transactions. The system developed by Kerviel allowed making bets of 50-75 billion euros, which significantly exceeded the bank’s own capital, and the budget deficit of the whole of France. Fraud was discovered on January 18, 2008. The management of the bank at a loss tried to close all positions, but this caused panic in all world markets. Experts, having studied the case materials, came to the conclusion that Jerome acted with the consent of his leadership. As a result, two cases are held in the courts of Paris, according to one of them, the bank accuses its trader of fraud, and on the other hand the anonymous client “Société Générale” has already acted against the trader. The most terrible thing in this story is that Kerviel did not even try to earn money personally. He simply arrogantly tried to build a career, risking other people’s money.
John Meriwether, a loss of 5.8 billion dollars.
By 1994, John Meriwether was already an experienced trader, dealing primarily with bonds. In the 80 years he was able to earn millions for Salomon Brothers. However, the machinations of one of John’s subordinates led to his resignation. The trader conceived a plan for grand revenge. To this end, in 1994, he created his own long-term capital management hedge fund (LTCM), assets of which exceeded 1.3 billion. Merivezer was able to entice the best traders Salomon Brothers. Among the founders was a lump from the Federal Reserve System and the legendary theoretician of the exchange business Myron Scholes. Merivezer attracted the client, telling about the market strategy, which will reduce the risks to almost zero. The results of the fund really impressed – 20% of profits in 1994, 43% in 1995 and 41% in 1996. In the spring of 1998, the fund indirectly controlled about 5% of the world market. In the same year, Meriweather relied on stabilizing the Russian market, acquiring a large debt obligation to Russia. However, soon our country announced a moratorium on payment of foreign debts, followed by a default, which was the first step in the collapse of a powerful fund. To prevent the financial crisis from engulfing other companies, the US administration provided LTCM with a loan of $ 3.65 billion. As a result, the company paid off all its creditors, finally closing in 2000. Merivezer was ruined by excessive, Romanic faith in the laws of the market and the hierarchy of power structures. In fact, it turned out that economic and political intrigues can cause a huge country to default without any preconditions for it.
Julian Robertson, a loss of 17 billion dollars.
If earlier, Julian was listed among the greatest investors, today he is the biggest loser. In 1980, Robertson opened his hedge fund Tiger Management. For 10 years, 8 million investment in it turned into 8 billion. The minimum contribution was 5 million. It was Robertson who most successfully chose where to invest. His personal annual income was from 300 to 400 million dollars! But with the beginning of the 90’s Julian begins to gradually lose his grip, he is haunted by setbacks. In 1996, Robertson loses $ 200 million in a deal with US Treasuries, two years later the fund finally fell into decay due to a fatally failed game against the Japanese yen and the bursting bubble of high-tech companies. Julian preferred to invest in his most promising actions in the framework of his strategies. The Tiger Foundation began to suffer tangible losses, its assets declined to 6 billion. As a result, in 2000 it was decided to close all the investment companies, returning the remaining capital to investors. The very same Robertson left Wall Street.
Peter Young, a loss of $ 400 million.
Peter Young worked for Morgan Grenfell Asset Management as a fund manager. Later the company was acquired by Deutsche Bank.In 1996, Peter was immediately fired from the company after it was discovered that his fund European Growth Trust worked with serious violations. The investigation revealed that Yang secretly created several fictitious companies that implemented variants with shares in his interests. Young inflicted losses of 400 million, after which he preferred to escape justice. Two years later the former investor was spotted near London, dressed in worn-out women’s clothes. Yang was accused of organizing a fraudulent scheme. But at the trial, Peter dressed in women’s clothes and said that he now must be called exclusively, like Elizabeth. The judges reasonably questioned the accused’s sanity. Over time, it turned out that Young even injured himself several times. The case was eventually closed, since the main defendant was found insane.
Hunt brothers, a loss of at least 550 million dollars.
Between 1979 and 1980, Nelson Bunker and William Herbert Hunt purchased more than 100 million ounces of silver bullion. The legacy of their father, a Texas billionaire, at 6 billion, allowed them to lead such a game. This allowed to bring down the price of silver to $ 50 per ounce. By 1979, the brothers, along with the kings of Saudi Arabia, controlled a third of the world’s silver market. In January 1980, the first wave of falling quotations began, and March 27, even nicknamed “silver Thursday” for a rapid fall. After the collapse, the brothers were forced to sell 59 million ounces. If earlier they paid 1.75 billion for them, now they only saved 1.2. Thus, losses amounted to at least half a billion. But the brothers continued to act in the same manner, finally bankrupt in 1988. On the court they were already on the subway. In addition, the authorities found that the Khanty tried to play a dishonest game, as a result, Nelson was fined 10 million for his attempts to control metal prices.