Who said that in the futures market, you can only be famous if you make a lot of money? Little did they know that there was still such a special group of traders who "made it famous" by relying on huge losses. The loss was due to the serious damage to the vitality of their old clubs, and they were nicknamed "devil traders"-"If you don't lose, you can't become a devil"! Next, Fire Elephant will give you an inventory of a few representative devil traders, and see what kind of "prodigal history" they have that shocked the industry? What warnings can it bring to ordinary investors?
To John Rus
Event: 2002 "Amazing Fraud"
Loss: $691 million loss
John Rusnak once worked for Allfirst Financial, the American branch of Allied Irish Bank (AIB), and began to engage in foreign exchange trading in 1993. In 1996, Rusnak started making risky trades in the Japanese yen. In 1997, he lost $29.1 million, and by 2001, that figure was $300 million. He hid those losses and created the illusion that the bank was still profitable. A subsequent $300,000 options order brought his total loss to $691 million. Allfirst Financial fired Rusnak immediately after discovering the fraud. In the end Rusnak was sentenced to 7.5 years in prison and was asked to pay all the damages. He was also fined $2.5 million and disqualified from practicing financial services for the next 20 years.
Liu Qibing
Event: The famous "National Reserve Copper Event"
Loss: $920 million loss
Liu Qibing once worked for the State Reserve Bureau of China. As the only trader authorized by the State Reserve Bureau to conduct overseas futures transactions, Liu Qibing's extremely speculative and illegal transactions eventually led to a major defeat. Liu Qibing once believed that the price of copper would fall, and made a large bet that the price of copper would fall: first, he established a large number of short positions in the futures market in the name of the National Reserve Adjustment Center, and then sold a large number of call options by way of structural options. As a result, copper prices rose sharply thereafter, resulting in a huge loss of 920 million yuan for the State Reserve Bureau. This is China's famous "State Reserve Copper Incident". Liu Qibing was also sentenced to seven years in prison for this.
Nick Leeson
Event: Bankruptcy of Barings Bank
Loss: $1.3 billion loss
Nick Leeson, the instigator of Barings Bank's bankruptcy. In 1992, at the age of 28, Leeson served as the head of operations of the world's oldest bank, Barings Bank, on the Singapore International Monetary Exchange (SIMEX). Since then, Leeson has subscribed for a total of $7 billion worth of Nikkei futures contracts and option transactions in the name of the bank without authorization. However, just as a major earthquake broke out in Kobe, Japan, the Nikkei Index fell all the way, resulting in huge losses. He hid these losses in unknown accounts. This failed speculation eventually caused Barings to suffer huge losses and eventually went bankrupt. Leeson was also sentenced to six and a half years in prison for this. He himself even wrote the autobiography "How I Broke Barings Bank" while in prison.
Hamanaka Tainan
Event: Lost the world's largest copper exporter on copper trading
Loss: $2.6 billion loss
Hamanaka Yasuo, known as "Mr. Copper", was the chief futures trader of Sumitomo Corporation in Japan. From 1991 to 1996, he participated in copper futures trading without authorization, attempting to do a large amount of long positions in the metal futures market to push up the global copper price. However, the speculation failed and eventually caused Sumitomo Corporation to lose 2.6 billion U.S. dollars, and was sentenced to 8 years in prison for this.
Brian Hunter
Event: Destroy a venture capital fund on its own
Loss: $6.5 billion loss
Brian Hunter was a trader at Amaranth Advisors, a venture capital fund, mainly engaged in natural gas futures trading. In 2005, he was long on natural gas futures trading. When Hurricanes Katrina and Rita hit the United States, the price of natural gas nearly tripled, making Amaranth a lot of money and attracting more investors. Hunter traded the same natural gas futures in 2006. This time, however, a misjudgment occurred, and after the hurricane passed, the price of natural gas also fell. Hunter's futures trading eventually caused Amaranth to suffer losses of more than $6 billion, and eventually declared bankruptcy.
Jerome Kerviel
Event: Miserable Societe Generale Bank
Loss: $7.1 billion loss
Jérôme Kérviél, who used to work in the compliance department of Société Générale, took advantage of his position and privately used bank funds to participate in a series of unauthorized speculative transactions in European futures, and invested a huge amount of short-selling chips in European stock futures. And create false hedging positions. With the outbreak of the subprime mortgage crisis, this speculative transaction eventually caused the Industrial Bank to suffer a loss of up to 7.1 billion U.S. dollars. Therefore, in 2008, he won the title of "the most devil trader" in history. He has since been sentenced to five years in prison and ordered to pay the bank all losses. Because of this high fine, Kérviél became the most indebted individual in the world.
Hunt Brothers
Event: Manipulation of Silver Futures in 1979
Defeat: The specific loss figures are not available
Brothers Nelson Bunker and William Herbert Hunt purchased close to 100 million ounces of silver bars throughout the 1970s in an attempt to manipulate the silver market, which caused silver prices to skyrocket in January 1980. Finally, on March 27, 1980, the price of silver plummeted, and the day became known as "Silver Thursday." The U.S. Commodity Futures Trading Commission (CFTC) fined Nelson Hunt $10 million for attempting to manipulate silver prices.
In fact, these "devil traders" were also "genius" people before their fiasco. They were doing top jobs in the financial industry, but their cleverness was misunderstood by their cleverness. In the end, they basically ended up in jail. Heaven And hell is only a thought away. From their failure experience, we can also realize that the futures market is inherently high-risk. If any investor ignores the terms and regulations of standardized transactions, the consequences will be disastrous. Although in the investment market, risk is directly proportional to return, this does not mean that blind risk will definitely bring excess returns. Therefore, Huoxiang suggests that everyone must trade in compliance! Scientifically control risks, don't be greedy for temporary profits! In this way, your trading journey will last forever~