In the public imagination, large investment banks and brokerage houses are often portrayed as selfish, profit-seeking, and almost immoral institutions that operate with impunity to exploit and rob the hard-working people through predatory practices and systemic greed. The 2008 financial crisis only solidified this view for many. Indeed, financial markets are tough, and the unchecked opportunism of many of their participants often hurts the little man. However, while abuse and corporate misconduct certainly have their place, financial history is also filled with shocking cases where the sole villain was, in fact, the little man himself. There have been notorious instances where the actions of a single, non-executive team member—a sole trader in a distant office, or a mid-level manager—destroyed the very banks they worked for, shattering their reputations at best and wiping out centuries of corporate history at worst. Driven by ego and fear, these individuals managed to single-handedly inflict catastrophic losses on banks that employ them and the clients they serve, exposing glaring weaknesses in risk oversight.
Octa broker presents to you a list of 'rogue traders' whose reckless decisions to engage in fraudulent, unauthorised, and highly speculative trades resulted in severe financial damage to important banks, sometimes leading to their outright collapse. These cases are a stark reminder that no system is immune to individual misconduct.
Below are the most notorious cases, ranked roughly by the scale of losses adjusted for inflation and impact.
- Jerome Kerviel (Société Générale)
Jerome Kerviel, a junior trader at French bank Société Générale, orchestrated one of the largest rogue trading scandals ever, resulting in a staggering €4.9 billion ($7.1 billion) loss.
Kerviel used his prior experience in the compliance department to bypass controls by creating fake hedging transactions to mask his massive, directional trades on European stock indices, including the DAX, CAC, and EuroStoxx 50. He built positions worth €50 billion, far exceeding his limits, and more than the bank's own market capitalisation. He wasn't diverting funds to a personal account—reports suggest he was driven by a desire to prove he was a trading genius, obsessed with beating the system. When his trades were finally discovered in January 2008, the bank had no choice but to liquidate them immediately, which locked in the catastrophic losses. The scandal prompted Société Générale to overhaul its risk systems and pay hefty fines. Kerviel was sentenced to three years in prison (serving five months) and ordered to repay the full amount, though this was later reduced on appeal.
- Yasuo Hamanaka (Sumitomo Corporation)
Known as 'Mr. Copper' for controlling 5% of the global copper market, Yasuo Hamanaka caused $2.6 billion in losses through unauthorised trades and market manipulation at Japanese trading giant Sumitomo.
Rogue trading isn't just a 21st-century phenomenon, nor is it limited to stocks and futures. For over a decade, Yasuo Hanamaka, the chief copper trader at Sumitomo Corporation of Japan, attempted to control the entire global copper market. He forged documents and conducted off-book deals on the London Metal Exchange (LME) to artificially inflate copper prices, generating short-term profits while hiding mounting deficits. In 1996, when regulators stepped in to investigate his activities, the scheme unravelled, leading to a sharp drop in copper prices. Hamanaka was sentenced to eight years in prison for fraud and forgery. Sumitomo settled with regulators for $150 million, and its accomplices, including Merrill Lynch, faced fines. This case highlighted how one trader's dominance and lack of oversight could distort entire commodity markets.
- Kweku Adoboli (UBS)
Ghanaian trader Kweku Adoboli, who worked at UBS, a Swiss bank, racked up $2.3 billion in losses through unauthorised trades in stock index futures.
In 2011, Adoboli exceeded his trading limits by booking fictitious hedges and exploiting internal systems to hide positions in Exchange Traded Funds (ETFs) tied to indices such as the S&P 500 and EuroStoxx. He was essentially running a secret, high-stakes hedge fund of his own within the bank he worked for. His positions, involving strategies like forward settling, ballooned to $2.3 billion in losses amid market volatility. In court, he claimed that it was corporate pressure to perform amid a volatile market that led to his actions, but prosecutors argued it was a fraud. The losses wiped out UBS's quarterly profits, leading to the CEO's resignation. Arrested at 31, Adoboli was convicted and sentenced to seven years, serving half before deportation to Ghana. UBS strengthened controls and faced regulatory scrutiny amid a damaged reputation.
- Nick Leeson (Barings Bank)
Perhaps the most famous rogue trader, Nick Leeson single-handedly collapsed Britain's oldest merchant bank, Barings, with £827 million ($1.4 billion) in losses from unauthorised futures trades on the Nikkei 225 and Japanese government bonds.
From Barings' Singapore office, Leeson was making his own unauthorised speculative trades in Nikkei futures, hiding losses in a secret '88888' error account. He was doubling down on losing positions—a strategy that amplified risks. His supervisors failed to separate his trading desk and back-office settlement duties, which was a critical failure of internal oversight. In total, Leeson had accumulated £827 million ($1.4 billion) in losses—double the bank's entire trading capital. On 26 February 1995, Barings Bank, a 233-year-old institution listing Queen Elizabeth II among its clients, was declared insolvent and was later sold to the Dutch bank ING for the symbolic sum of £1. Leeson was convicted and sentenced to six and a half years in Changi Prison in Singapore. His story was later adapted into the 1999 movie Rogue Trader, in which Ewan McGregor played the role of Nick Leeson.
- Toshihide Iguchi (Daiwa Bank)
Toshihide Iguchi, U.S.-based executive at Japan's Daiwa Bank, confessed to $1.1 billion in losses from unauthorised U.S. Treasury bond trades that ran over 11 years.
Iguchi's scheme began with a small loss in 1984, which he tried to recover. The lack of segregation between the front office (trading) and the back office (settlement) allowed him to falsify over 30,000 trading slips over the years. Eventually, in 1995, in a 30-page confession letter to his boss, he revealed the scheme. Iguchi was sentenced to four years in prison and fined $2.6 million. The Federal Reserve (Fed) ordered Daiwa Bank to cease all operations in the United States, forcing the sale of its US assets. Iguchi later wrote books on his 'billion-dollar education', reflecting on the psychological traps of trading.
- John Rusnak (Allied Irish Bank)
In 2002, the Baltimore-based foreign exchange trader John Rusnak was found to have hidden trading losses of nearly $700 million at Allfirst Financial, a subsidiary of Allied Irish Bank (AIB).
Rusnak bet heavily on the yen rising against the dollar without hedging, using fake options contracts and identities. Suspicion arose when firms like Goldman Sachs refused deals, and Rusnak’s 'martingale' strategy of doubling bets failed. The scandal led to Allfirst's sale and job losses, exposing lax oversight in foreign exchange desks. Rusnak was sentenced to seven and a half years (serving six).
Conclusion
The extraordinary tales of rogue traders like Leeson, Kerviel, and Adoboli are dramatic and costly reminders of where unchecked human ambition can lead if it is not met with robust institutional oversight and individual discipline. The executives and risk managers at these sophisticated, multi-billion-dollar institutions often knew nothing about the true scope or risk of the operations occurring right under their noses. The cases we outlined reveal a common thread: a failure to maintain the critical separation of duties, a lack of independent monitoring, and the perilous, ego-driven hope to 'trade out' of a bad situation and recover losses through escalation. Therefore, robust risk management is an absolute necessity for every institution engaging in the financial markets.
These cases also serve as a lesson for retail traders: a lack of control can lead to personal financial ruin. At Octa broker, we believe in a transparent and disciplined approach to trading. We have been providing access to financial markets for retail traders since 2011, and we consistently stress that trading is not gambling. Trading is a discipline of analysis, strategy, and calculated risk management. Chasing losses, exceeding established limits, or making unauthorised, 'all-or-nothing' bets is a recipe for disaster.
Disclaimer: This article does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk—Octa does not accept any liability for any resulting losses or consequences.
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