Exactly 25 years ago, Britain’s oldest investment bank, which listed Queen Elizabeth II among its clients, was declared insolvent. The collapse of Barings Bank was caused by colossal losses incurred by a single rogue trader. Nick Leeson, the bank’s then 28-year-old head of derivatives in Singapore, gambled more than $1 billion in unhedged, unauthorized speculative trades, an amount which dwarfed the venerable merchant bank’s cash reserves. Leeson’s assignment in Singapore was to execute “arbitrage” trade, generating small profits from buying and selling futures contracts on the Japanese Nikkei 225 in both the Osaka ... (full story)