Nick Leeson's Event and the Related Financial Market Theories

Nick Leeson Event
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Nick’s Event
Nick Leeson's event speaks into issues of business law and financial scandals and the implication of such matters on an organization's performance. Nick Leeson is an English former derivative trader renowned for facilitating Baring Bank's bankruptcy. The notorious trader precipitated rogue, unauthorized, fraudulent, and speculative traders that led to the fall of the United Kingdom's oldest merchant (Kilic & Wachter, 2018). His actions led to the collapse of the bank in 1986, leading to his life imprisonment. Leeson had managerial roles at Galway United's League of Ireland between 2005 and 2011, where he oversaw the firm's fall after experiencing immense financial difficulties leading to bankruptcy and dropping of the club from Ireland's league during the 2011 season. This paper deciphers the implications of Nick’s financial decisions and how the traditional financial theories differ from the modern concepts. The report will analyze the event based on its relation to financial frauds and how these issues affect the operations of a business. The implementation of ineffective financial market theory affects the performance of a business organization leading to lower productivity and profitability.
Nick began his career at the age of 28 when he became a manager at Baring. The young trader rose to success through speculative trade that precipitated huge returns to the firm. Nick moved to Singapore in 1992 to clear and execute transactions but later began to make unauthorized deals which precipitated huge returns to the bank at first but later led the oldest merchant bank in UK into bankruptcy. The renowned trader was expected to manage neutral business but instead used the organization’s funds to engage in unauthorized deals in attempt to revive his waning business. His business losses were twice the available trading capital for the bank he served. The financial mistakes and scandals led the bank to be declared bankrupt in 1995. The approach that he took was pegged on traditional financial market theories which are known to be less effective in contemporary business settings.
Nick Leeson's results were an enhancement in financial accountability and corporate social responsibility among organization managers. These issues exposed financial frauds that bedevil most financial sectors in business organizations. Financial scandal refers to accounting interference and manipulation through means such as embezzlement of funds, forgery, and corruption. Financial scandals in the past have resulted in the loss of billions of dollars, loss of jobs, and even bankruptcy. Corporate fraud can result in billions of losses for investors, consumers, and suppliers. In some instances, they lead to business folding, job losses, and detrimental effects on the environment. Ineffective financial market models can undermine the trust of consumers, shareholders, and investors in specific industries and institutions, with adverse social outcomes.
No matter how strict the rules governing an organization are, the vast amounts of money generated are usually prone to fraud. This is because some individuals are generally willing to lay their hands on ...