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Nick Leeson: An Exploration into Individual/Systemic Fraud - Essay Example

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Oftentimes, one of the best means of seeking to appreciate and understand the existing constraints that are evidenced within the law is by seeking to understand situations that were key in helping legislators and stakeholders to further define these laws. …
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Nick Leeson: An Exploration into Individual/Systemic Fraud
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Download file to see previous pages Almost invariably, laws come into being due to the fact that unscrupulous individuals find means of unethically circumventing certain existing provisions or laws. One such individual is that of Nick Leeson. Accordingly, this brief analysis will seek to focus upon the events surrounding Leeson’s fraud as well as the lessons that were learned, changes that were made, and precedence that was set based upon this particular case. Moreover another specifically interesting aspect of white-collar crime, such as the one which was perpetrated and committed by Nick Leeson, is the overall prevalence and rise in popularity that this type of crime represents. Whereas unethical behavior and fraud have always been part of the business environment, the rise in white-collar crime within the past 20 to 25 years dwarfs the rise that is exhibited in most if not all of the other forms of crime within a given system. Nick Leeson’s story ultimately begins, as with most criminals, with something of a small issue. When filling out an application for a broker’s license within the United Kingdom in the early 1990s, Leeson Incorporated several lies into the application; accordingly, he was denied his broker’s license based upon the fraud that was evidenced within his initial application (Drummond 93). Recognizing that his career within brokerage was ultimately doomed unless he was somehow able to turn his fortunes and his career around, Leeson applied for and received the position of general manager in the futures market on the Singapore International Monetary Exchange; also known as SIMEX (Greener 426). Naturally, as one might expect, already somewhat committed to the dishonesty that he of perpetrated in the United Kingdom, Leeson did not make any disclosure with regards to the prior fraud that he is been charged with. With such an inauspicious start to his career, it comes as no surprise that Leeson soon began making unauthorized speculative trades. The understanding, in Leeson’s mind, was that these unauthorized and speculative trades were ultimately making the company he was working for, Barings, a very large sum of money. Within the early years, it was estimated that Leeson’s profits for Barings constituted upwards of ?10 million. As a function of this shocking level of profitability, Leeson was congratulated, promoted, and given bonus after bonus. Yet, as one might expect, the level of profitability that Leeson was able to make based upon the speculative trades ultimately ran out. Although much of what’s Leeson was doing was based on a fair amount of skill, a great amount of it was also based on luck in the general performance and trends of the market at the given time. In this way, for the first time Leeson came to a unique juncture. He could either admit the painful truth that his speculative trades, utilizing less than ethical standards, were losing the company money or he could seek to cover up these losses until such a time as his luck improved again. As one might guess, Leeson opted for the latter. In first, he was hiding small losses of around ?20,000. It is been estimated by the team of investigators that oversaw Leeson’s case that upwards of ?35 million pounds were stashed in a variety of bank accounts around the globe; ultimately linked to the bad trades that he made. This was all possible due to the fact that Leeson’s unique position allowed him to be chief trader while the same time having the responsibility of settling his own trades. Generally, these functions were handled by different people; however due to his stature and importance within the bank, Leeson was trusted implicitly. As the international markets cooled further, Leeson’ ...Download file to see next pages Read More
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