The dramatic and hedonistic days of Nick Leeson may well be decades behind us, however rogue trading is clearly not extinct.
The latest incarnation of such a trader is Andy Donaldson, an FX trader who was suspended from his position at Deutsche Bank in June this year after the bank discovered that there were irregularities in the way he was valuing currency trades that he made.
Yesterday it emerged that he has been removed from his position by Deutsche Bank and is under investigation by the Australian Securities and Investments Commission (ASIC) for allegedly inflating trades, resulting in losses to the bank totaling $5 million.
A spokesperson for the bank explained to Fairfax Media that “the bank recently dismissed a trader after checks uncovered irregularities in how he recorded his trading activities. The issue is internal only and did not have an external impact. The sum involved was not material to the bank. We have notified and are working with the relevant authorities and taking steps to ensure that this unacceptable behaviour will not be repeated.”
In order to investigate the matter, ASIC is working with the Australian Prudential Regulation Authorities alongside Deutsche Bank, following a pattern Mr. Donaldson’s professional conduct prior to the discovery that he had been overstating tades across a series of global currencies.
Mr. Donaldson was based at Deutsche Bank’s Sydney operation, with his conduct in this case being a completely seperate matter to the global regulatory and legal investigation into the allegations that certain banks have been manipulating FX benchmarks. The difference being that Mr. Donaldson personally conducted his scheme, without the bank’s involvement, and reported false figures to his employer.
For this reason, the matter is unconnected with the global investigation, and ASIC is making investigations into Mr. Donaldson as a subject rather than the bank itself, demonstrating that employees of large institutions can be held personally accountable for their actions despite employee status and the responsibility of the institution to ensure good conduct of traders.