I've only half-hazardly looked into the history of rouge trading, but it seems that in every instance at a major bank the culprit is always someone who started from either a BO or MO position.
Do you guys think that this is a fault within a system or a system fault? Do past BO/MO feel that they need to prove themselves more, hence take more risk? Are they unfairly scapegoated? Or are these events simply coincidences?
FYI. I dont wanna bash on MO/BO, nor do I care about their ability to move into FO. I simply want to know if social structure is set up in such a way that encourages these individuals into recklessness.
I believe that this is the case, since people in BO/ MO know more about the trading systems and how to clear them. By having knowledge of this, they are able to hide their trades by manually clearing their trades instead of having traditional ops clear their trades. I think i read this in an article before...
Its a mix of all of what you listed. Also I think some are scapegoated in connection to racking too much personal losses. Its easy to push all of the blame on the "less qualified".
BO people know how to dupe the system because they've been involved in trade clearing/processing, simple. If a lot of morally wrong guys who have never been in the BO knew how to do it, they'd do it too. Bad is bad, whether it comes from BO or originated in the FO
Yeah, I think it's strictly a function of knowing how the clearing process works at the individual bank, and the workarounds therein.
Its very easy when you know who the compliance people are and what their routines are like. It seems that even at the larger shops, those departments (and specifically those tasks) are understaffed, it'd be easy to slip one by them.
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