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Pages:
7 pages/β1925 words
Sources:
3 Sources
Style:
Harvard
Subject:
Business & Marketing
Type:
Essay
Language:
English (U.S.)
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MS Word
Date:
Total cost:
$ 30.24
Topic:
Rouge Trading: Rogue Trader Nick Leeson
Essay Instructions:
Must be written according to the information must be written with case study The above materials are ready! Thank you! 10-15 references, best to write 12 Thank you!
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ROGUE TRADING
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Rogue Trading
A rogue trader is an employee who is authorized to trade on behalf of the employer, but makes trades that are not allowed. It usually involves making financial transactions of financial assets that are not approved by professional rogue employees (Weber 2015, p.30). This activity is a violation of the law because the perpetrator has been a rightful employee of the company yet he enters into transactions on behalf of the employer without permission. At several times massive profits and bonuses have been made by employees to their employers from trades that are in the rift with the various legislations. It has been said that the employers turn on the blind eye to such transactions because of many profits involved. One of such example of a rogue trader is Nick Leeson, a famous derivatives broker and a rogue trader who made moves that were speculative, unauthorized and fraudulent that led to the collapse of Barings Bank in 1995. This paper will review rogue trading using Nick lessen case study. It will explain what rogue trading is as well as showing various legal and ethical issues around it.
Rogue traders typically play with investments that have high risks, and that can produce significant losses or gains. They are mostly labeled as a rogue when they lose, but if they make enormous profits, they are likely to receive a huge bonus. Nick Leeson unauthorized investments in index futures contracts led to the bankruptcy of his employers Barings bank in 1995. There have been consecutive financial losses and bankruptcies in different companies a situation that is associated with poor decisions by the senior management of organizations (Dodson 2017, p.15). These people do not surface often, but anytime they get a chance they cause huge losses and bring about embarrassment to the senior management of the organization.
Because rogue trading is a calamity to the industries that offer financial services, senior executives and boards may once in a while ask questions about their organization's use of financial instruments that can have consequences that are explosive if they are not used in the manner that they are intended. The most important thing is to manage the use financial derivatives because behavior that is dysfunctional can undergird already established regulations thus creating “blind spots” in the organization that can as well lead to cleaving to set rules and policies (Shenglin et al. 2018, p.120). The top-down emphasis is on responsible and ethical business. Therefore, any organizations, top of the tone should always be translated into a dynamic sound in the middle and before it can reach the rest of the organization.
The tone of the organizations affects its culture in terms of risk which is the way organizations workers and personnel manage risks. There are various causes of rogue trading — first, deficiencies or flaws in an organization`s risk governance. Every organization should always have a well-formulated framework to keep on check all bad practices that might happen in the entity. These systems and structures should still be up to date and able to see any risk before it happens. If a...
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