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Rapport de synthèse du cas jerome kerviel. L’Inspection générale (SEGL/INS) a été saisie par le Comité exécutif du Groupe le 24 janvier 2008 pour conduire une mission d’investigation sur la fraude opérée par Jérôme KERVIEL (JK), trader au sein de l’activité ...

How Leeson Broke Barings part 3 The BoBS report notes "In each instance, the entries in the Contac system reflected a number of spurious contract amounts at prices different to those transacted on the floor, reconciling to the total lot size originally traded. This had the effect of giving the impression from a review of the reported ...

 How Leeson Broke Barings part 2 But Leeson's Osaka position, which was public knowledge since the OSE publishes weekly data, reflected only half of his sanctioned trades. If Leeson was long on the OSE, he had to be short twice the number of contracts on SIMEX. Why? Because Leeson's official trading strategy was to take advantage  of ...

How Leeson Broke Barings The activities of Nick Leeson on the Japanese and Singapore futures exchanges, which led to the downfall of his employer, Barings, are well-documented. The main points are recounted here to serve as a backdrop to the main topic of this chapter - the policies, procedures and systems necessary ...

Lack of supervision Theoretically Leeson had lots of supervisors; in reality none exercised any real control over him. Barings operated a 'matrix' management system, where managers who are based overseas report to local administrators and to a product head (usually based at head office ...

Market risk Because Leeson controlled the back office and because Barings had no independent unit checking the accuracy of his reports, the market risk reports generated by Barings' risk management unit and passed on to ALCO were inaccurate. Leeson's futures positions showed no market risk because trades ...

Credit risk The credit risk implication of the client advances represented by the 'top-up' balances was significant if the total funds remitted to Singapore was to meet genuine client margin calls. Yet the Credit risk department did not question why Barings was lending over US$500 million to its clients ...

Poor control procedures  Funding Barings' control procedures were sloppy. No where is ...

Adequate capital There are two aspects to this issue - an institution must have sufficient capital to withstand the impact of adverse market moves on its outstanding positions as well as enough money to keep these positions going. Barings management thought that Leeson's positions were market neutral and were thus quite happy to fund margin ...

Senior management involvement The crux of the Barings' collapse lay in senior management's lackadaisical attitude to its derivative operations in Singapore. Every major report on managing derivative risks has stressed the need for senior management to understand the risks of the business; to help articulate the firm's risk appetite and draft ...

Lessons from nick Leeson Segregation of front and back-officeThe management of Barings broke a cardinal rule of any trading operation - they effectively let Leeson settle his own trades by putting him in charge of both the dealing desk and the back office. This is tantamount to allowing the person who works a cash-till to bank in the day's ...

Not Just One Man - Barings The Nikkei 225 and JGB futures contracts traded by Leeson were the simplest of derivative instruments. They were also the most transparent - since they were listed contracts, Leeson was required to pay (or receive) daily margins and so needed funds from London. In January and February 1995 alone, he asked for ...