Nick Leeson is not a traditional gambler. Rather, he is a man who decided to bet on the financial sector and win before letting it all go to his head. There are times in life that choosing one financial move over another can pay off quite well. Leeson decided to bet on the Barings Bank located in Singapore. He managed to earn roughly $30 million all in one year. It is no small wonder that the columnist was suddenly on cloud nine. He managed to make so much money almost anyone would have reacted the same way when gambling with banks.
Leeson decided to build his reputation further and further. After all, he was a columnist and he was now a millionaire. Worried about his money and not wanting anyone else to have access to it he set up an account of special means. The account was tied to the bank which he was running. Leeson was seen as a man that could be trusted. The bank was one with 230 years of history as a place that could also be trusted. The downside is that while Leeson had 30 million from his initial play he was now losing more and more. The account, which he controlled alone, meant that no one could see what he was doing. No one even asked about what he was doing. Even after all the deals he made which seemed to be too much in too little amount of time no one was getting curious.
During ‘94 to ‘95 the losses were just too much. One particular issue was the Japanese stock market purchase he made. He decided to go with Nikkei 225. What you can compare this to is a bet on a football match. Leeson felt that the stock would go up. He felt he would be able to make more money and perhaps cover his losses. If the stock went up it certainly would have helped but he bet wrong.
He didn’t factor in that an earthquake would affect the stock. Kobe suffered from an earthquake which seriously affected Nikkei. What Leeson did next was even worse. Instead of backing off and taking the losses and instead of owning up to his managing gambling habit on the stock market he decided to bolster the stock by putting more money into it. In 1995, Leeson had to leave Singapore or be arrested. Luck finally ran out for him in all areas. His gambles on the market and complete tanking of a good bank ensured his arrest in Germany. Barings Bank had to go under because of the financial losses Leeson created. It also went under because no one bothered to regulate Leeson. For his crimes he was sentenced to 6.5 years in prison. It seems like a small amount considering the money he lost and the complete destruction of a well known bank.
This is why sometimes gambles just do not pay off. He may have made a lot of money, but he didn’t know when to stop.