WEBVTT - 'Original Rogue Trader' Nick Leeson Talks Barings, Trump Deregulation 0:00:00.240 --> 0:00:04.160 Welcome to this special Bloomberg podcast with me Caroline Hepger 0:00:04.519 --> 0:00:08.920 and alongside our finance reporter Will Shaw. Now, it has 0:00:09.000 --> 0:00:13.560 been thirty years since Bearings Bank, Britain's oldest merchant bank 0:00:13.600 --> 0:00:17.360 at the time, collapsed after twenty eight year old derivatives 0:00:17.360 --> 0:00:21.680 trader Nick Leeson racked up and concealed a billion dollars 0:00:21.960 --> 0:00:26.159 of trading losses at Bearings Singapore office. Lison became the 0:00:26.160 --> 0:00:29.280 face of financial misconduct. He served more than four years 0:00:29.520 --> 0:00:32.239 in Shangy Prison. He wrote a book, Rogue Trader, that 0:00:32.320 --> 0:00:35.519 was then turned into a Hollywood movie. In the decade 0:00:35.560 --> 0:00:39.280 since then, Lison's been on the speaker circuit talking about 0:00:39.320 --> 0:00:43.280 what he calls the most embarrassing period in his life. 0:00:43.560 --> 0:00:46.120 He's owned a football club in Ireland along the way, 0:00:46.520 --> 0:00:51.640 and more recently his work to investigate financial misconduct. And 0:00:51.720 --> 0:00:55.000 Nick Leeson joins us now today. Welcome Nick, good morning. 0:00:55.080 --> 0:00:56.920 Thank you very much for having me. I'm looking forward 0:00:56.920 --> 0:00:57.120 to it. 0:00:57.480 --> 0:01:00.440 Yeah, I want to have a discussion because of course 0:01:00.560 --> 0:01:03.480 it is thirty years now since the collapse of Bearings. 0:01:04.200 --> 0:01:07.559 How do you think about that whole period in your life, 0:01:07.600 --> 0:01:10.720 the impact that it had both on Bearings and also 0:01:10.920 --> 0:01:12.680 on you with that distance. 0:01:12.760 --> 0:01:14.720 Now, Yeah, well, I think you summed it up perfectly 0:01:14.760 --> 0:01:18.759 in the beginning. It's still with huge embarrassment on my part. 0:01:18.840 --> 0:01:21.319 You go through, you know, a lot of shame, a 0:01:21.360 --> 0:01:23.920 lot of guilt, embarrassment at the time, but the one 0:01:23.920 --> 0:01:26.920 that stays with you is the embarrassment because it's the 0:01:26.959 --> 0:01:30.160 complete opposite of what I wanted to achieve. And up 0:01:30.240 --> 0:01:33.440 until a certain point, I'd had a fairly good career 0:01:33.480 --> 0:01:36.399 in the world of banking, and then it all imploded 0:01:36.520 --> 0:01:38.800 very very quickly when I was in Singapore. So I was, 0:01:39.240 --> 0:01:41.679 you know, very much the ascending star for a short 0:01:41.720 --> 0:01:45.360 period of time and then had a very spectacular fall 0:01:45.360 --> 0:01:48.360 from grace. And that still sits with you. You can, you know, 0:01:48.440 --> 0:01:52.200 you can recover from a personal perspective, but you still 0:01:52.240 --> 0:01:53.960 look at that period of my life and am I 0:01:54.320 --> 0:01:56.680 Am I comfortable with it? Am I at peace with it? 0:01:56.920 --> 0:01:59.920 Absolutely not, because that just wasn't me and what I 0:02:00.120 --> 0:02:02.680 wanted to achieve. But it's always going to be the 0:02:02.880 --> 0:02:04.720 piece of baggage that I carry around. 0:02:05.160 --> 0:02:09.320 You were the star trader sent sent from London to Singapore. 0:02:09.440 --> 0:02:12.560 You made the bank a lot of money over the years, 0:02:12.639 --> 0:02:17.359 you built up positions, particularly in the Nickey. At what 0:02:17.440 --> 0:02:20.640 point did you know that the cover up of the 0:02:20.639 --> 0:02:23.560 trades couldn't be hidden anymore? Like, what was the key 0:02:23.680 --> 0:02:25.760 moment when you knew it was going to unravel. 0:02:27.320 --> 0:02:31.400 It's very difficult to put an absolute definite answer on that. 0:02:31.480 --> 0:02:34.480 I think I was always as deep as I was 0:02:34.480 --> 0:02:37.480 getting into the situation, as bad as it was getting, 0:02:37.600 --> 0:02:41.480 you were always you're always looking for this slight positive, 0:02:41.919 --> 0:02:44.160 you know, maybe the market to turn around a little bit, 0:02:44.280 --> 0:02:48.600 or you've managed to overcome a particular investigation from somebody 0:02:48.600 --> 0:02:50.959 within the bank, and that always gave you the belief 0:02:50.960 --> 0:02:52.919 that you had a little bit more time to try 0:02:52.960 --> 0:02:55.960 and solve the situation, which is really all I was 0:02:55.960 --> 0:02:58.360 ever interested in doing. You know, I know I should 0:02:58.360 --> 0:03:01.200 never have got into the situation as soon as I 0:03:01.280 --> 0:03:02.880 was in it and it was getting worse. All I 0:03:02.919 --> 0:03:06.000 wanted to do was solve it. So you'd grab these 0:03:06.040 --> 0:03:08.840 positives and when you look back with hindsight, they're all 0:03:08.880 --> 0:03:11.919 false positives. But they just convinced me that I had 0:03:11.919 --> 0:03:13.960 a little bit more time to try and turn the 0:03:14.000 --> 0:03:17.600 situation around. And you know, there were no barriers or 0:03:17.680 --> 0:03:20.080 controls to what I was doing and I was. I 0:03:20.120 --> 0:03:23.239 was never pushed back on at all in terms of 0:03:23.560 --> 0:03:26.880 how far I could take it, unfortunately, and I. 0:03:26.840 --> 0:03:29.120 Mean even I mean you flared at one point, and 0:03:29.280 --> 0:03:31.880 you and you you went a Kuala Lumpur, and even 0:03:31.919 --> 0:03:34.000 at that point, according to your book, you kind of 0:03:34.440 --> 0:03:36.280 you didn't think that the bank was going to collapse. 0:03:36.360 --> 0:03:41.280 No, no, no, I mean as a young trader working 0:03:41.360 --> 0:03:44.480 in Singapore. You know, the last thing that you know, 0:03:44.560 --> 0:03:47.400 I was interested in was what was the capital base 0:03:47.400 --> 0:03:49.080 of the bank. You know, that was that was a 0:03:49.080 --> 0:03:52.040 different area. You know, the Treasury would look after the 0:03:52.080 --> 0:03:54.480 capital base of the bank, how the reporting was done 0:03:54.480 --> 0:03:57.320 to the Bank of England at the time, and what 0:03:57.360 --> 0:03:59.640 were the legal limits you could lend to a subsidiary. 0:03:59.680 --> 0:04:02.120 They weren't something that I thought about. If I phoned 0:04:02.160 --> 0:04:05.280 Treasury and I asked them fifty million pounds or fifty 0:04:05.280 --> 0:04:08.040 million dollars or one hundred million dollars, if they paid 0:04:08.040 --> 0:04:10.960 that over to me, you know, that was the end 0:04:11.040 --> 0:04:13.480 of the transaction. How it impacted on the rest of 0:04:13.520 --> 0:04:16.640 the organization in terms of the capital base and how 0:04:16.720 --> 0:04:19.560 much it was lending to a subsidiary. You know, they 0:04:19.600 --> 0:04:22.719 weren't processes or thought processes that I was going through, 0:04:22.960 --> 0:04:24.920 you know, when you look back at the story, and 0:04:25.160 --> 0:04:27.240 I had six hundred and fifty million pounds of me 0:04:27.800 --> 0:04:30.360 in Singapore, the capital base of the bank was only 0:04:30.400 --> 0:04:33.040 two hundred and fifty million legal limit you could. 0:04:33.000 --> 0:04:35.640 Endure a subsidiaries fifty and you were because you were 0:04:35.640 --> 0:04:37.360 in charge of the office in. 0:04:37.320 --> 0:04:40.279 Singapore, right, Yeah, I didn't have access to the money, 0:04:40.560 --> 0:04:42.679 you know. I still had to refer to a treasurer 0:04:42.720 --> 0:04:45.320 in London to ask for the money, and then he 0:04:45.360 --> 0:04:48.279 would pay the money over. I'd give him nonsensical reasons 0:04:48.320 --> 0:04:52.599 for the money, you know, and was definitely definitely concealing 0:04:52.640 --> 0:04:55.479 the real reason for needing the money at that time. 0:04:55.560 --> 0:04:59.760 But the fact that it went past so many limits 0:05:00.040 --> 0:05:04.520 and regulatory limits in terms of you know, twenty percent 0:05:04.560 --> 0:05:07.159 of the bank's capital being lent to a subsidiary. You know, 0:05:07.160 --> 0:05:09.039 I was in thirteen times in breach of that. But 0:05:09.080 --> 0:05:12.240 the Treasury Department allowed that to happen. Doesn't take away 0:05:12.279 --> 0:05:15.360 any of my guilt or my responsibility, but you know, 0:05:15.440 --> 0:05:18.400 that's part of the processes that should have been in 0:05:18.400 --> 0:05:20.040 place to stop this sort of thing happening. 0:05:20.279 --> 0:05:22.560 Do you recall the specific time when you started to 0:05:22.600 --> 0:05:24.960 turn your life around afterwards. 0:05:25.000 --> 0:05:27.400 After the collapse of the bank, Yeah, and after. 0:05:27.200 --> 0:05:29.360 Your time and your time in prison and all the 0:05:29.400 --> 0:05:32.479 all the repercussions, Like, what was the kind of key 0:05:32.520 --> 0:05:34.360 turning point for you and rebuilding? 0:05:35.880 --> 0:05:37.920 I don't know if there's a again, I don't know 0:05:37.960 --> 0:05:39.680 if there's a key turning point. I think it's a 0:05:39.720 --> 0:05:42.360 slow process. You you know, when you're in prison and 0:05:42.400 --> 0:05:45.480 you're looking at everything that you've done, that you've done 0:05:45.520 --> 0:05:49.159 and you've been involved in, you go through this process 0:05:49.240 --> 0:05:53.080 of really pulling back the layers of what's happened, and 0:05:53.240 --> 0:05:56.000 you have to really have a long, hard look at yourself. 0:05:56.120 --> 0:05:58.839 You you know, you you get to a situation where 0:05:58.839 --> 0:06:01.800 you dislike a lot of things that you've done, which 0:06:01.880 --> 0:06:04.520 was obvious. But then at some point, and it's probably 0:06:04.560 --> 0:06:06.480 a couple of years after release, you have to start 0:06:06.520 --> 0:06:10.440 looking at yourself and protecting yourself. So it becomes about 0:06:10.600 --> 0:06:14.200 looking at or building back up your self esteem, your 0:06:14.200 --> 0:06:17.560 self worth, your self confidence, and that comes through, you know. 0:06:17.600 --> 0:06:19.320 One of the ways that I suppose it's worked for 0:06:19.360 --> 0:06:21.440 me over the years has been fairly open with the 0:06:21.440 --> 0:06:24.880 world's media. Yeah, you know, I've never been combative in 0:06:24.960 --> 0:06:29.080 terms of you know, people looking for me for a story. 0:06:29.560 --> 0:06:32.200 You know I prefer and I should have started this 0:06:32.240 --> 0:06:34.960 a lot earlier, I know that. But you know I 0:06:35.000 --> 0:06:37.919 prefer to be very honest and very open book about 0:06:38.279 --> 0:06:41.120 about things that happened, and you know the ways that 0:06:41.200 --> 0:06:43.159 I reacted to things during that period. 0:06:43.440 --> 0:06:45.560 But there is still a tension, isn't there? And I 0:06:45.560 --> 0:06:48.120 think this is also why your story even now is 0:06:48.160 --> 0:06:51.080 so fascinating to so many people in finance, which is 0:06:51.160 --> 0:06:55.400 that tension between the rogue trader. And others have mentioned this, 0:06:55.520 --> 0:06:58.240 like Jerome Cavill. You know, he's talked about he made 0:06:58.600 --> 0:07:02.080 enormous losses for his bank a few years ago in 0:07:02.120 --> 0:07:06.719 the Billions, and he talks about being scapegoated versus the 0:07:06.839 --> 0:07:10.920 kind of controls that should be in place, and that 0:07:10.960 --> 0:07:14.000 there's that tension there, isn't it. How much responsibility is 0:07:14.000 --> 0:07:18.760 on the individual versus actually the oversight that should be there, and. 0:07:18.720 --> 0:07:20.960 It's a combination of the two. I think anybody who 0:07:21.000 --> 0:07:25.280 describes themselves as a scapeboat scapegoat is lying. Right. You 0:07:25.320 --> 0:07:27.520 know what you're doing, you know you shouldn't be doing it. 0:07:27.600 --> 0:07:31.160 You continue all the same, and therefore you're responsible and 0:07:31.240 --> 0:07:34.920 you need to take responsibility for your actions. You know, 0:07:35.000 --> 0:07:38.600 a lot of the other road traders that you can mention, Quaker, Duboli, 0:07:39.040 --> 0:07:44.160 your own Curvial, Iguci at Diora, there's probably too many 0:07:44.200 --> 0:07:48.320 to mention. A lot of them talk about pressure to perform. Again, 0:07:48.400 --> 0:07:52.160 it's rubbish. This is a decision between right and wrong, 0:07:52.200 --> 0:07:54.720 and you know that it's wrong from the beginning, and 0:07:54.760 --> 0:07:56.880 you know that you're going down the wrong path, and 0:07:56.960 --> 0:07:59.960 you continue for various reasons, and you know, I prefer 0:08:00.200 --> 0:08:03.320 to focus on the reasons rather than trying to blame 0:08:03.360 --> 0:08:07.240 somebody else. It's a shortcoming in my personality as much 0:08:07.240 --> 0:08:10.800 as it was with Curvial and Adiboli. They took the 0:08:10.840 --> 0:08:14.160 wrong path, they made the wrong decision, and they covered 0:08:14.200 --> 0:08:17.960 up from that particular point. Yes, the bank has a 0:08:18.000 --> 0:08:21.360 responsibility to make sure that they have systems, controls and 0:08:21.400 --> 0:08:23.960 policies in place. And you know the fact that their 0:08:24.000 --> 0:08:28.280 negligent doesn't take away your guilt. I don't think so. 0:08:28.920 --> 0:08:31.880 Sometimes we have a difference of opinion with the in 0:08:31.960 --> 0:08:34.160 terms of how the other road traders view some of 0:08:34.200 --> 0:08:34.679 these things. 0:08:34.960 --> 0:08:37.960 Looking back at the reporting at the time, it seems 0:08:37.960 --> 0:08:41.320 like there was a strong kind of clust dimensioned in 0:08:41.360 --> 0:08:44.920 some respects as to what happens. You came from Watford, 0:08:44.920 --> 0:08:46.760 you were the son of a pluster, You rose very 0:08:46.760 --> 0:08:48.480 fast through the ranks as. 0:08:48.280 --> 0:08:49.120 You depicted it. 0:08:49.720 --> 0:08:54.480 The leaders of Bearings were sort of posh, foolish, not 0:08:54.679 --> 0:08:57.800 in control of the company that they were running. 0:08:58.160 --> 0:09:01.040 Like to what degree was like clus part of that story? 0:09:01.080 --> 0:09:04.360 And do you see is that route still there for 0:09:05.160 --> 0:09:09.520 people for people to rise high and fast in banks 0:09:09.559 --> 0:09:10.199 like that today? 0:09:10.280 --> 0:09:13.080 But there is. If you're successful, you're gonna You're going 0:09:13.120 --> 0:09:16.199 to succeed in any business. I think sometimes the trajectory 0:09:16.640 --> 0:09:18.680 is a bit quicker within the world of banking. But 0:09:19.200 --> 0:09:22.160 the whole class element element of it, which comes through 0:09:22.160 --> 0:09:25.120 in the first chapter of Road Trader, is probably the 0:09:25.120 --> 0:09:27.360 part of the book that I just don't agree with. 0:09:27.440 --> 0:09:29.880 But you know, I was stuck in prison in Germany. 0:09:29.960 --> 0:09:32.320 I had massive legal bills that need to be met. 0:09:32.400 --> 0:09:34.760 So when we were or when I was co authoring 0:09:34.840 --> 0:09:37.360 the book with Edward Whitley at the time, he wrote 0:09:37.360 --> 0:09:41.720 that chapter and it was very keen or the publishers 0:09:41.760 --> 0:09:45.480 were very keen that that was you know that that 0:09:45.559 --> 0:09:49.079 whole part of it, the class, the class conflict, if 0:09:49.080 --> 0:09:52.520 you like, was embellished through that first chapter. So it's 0:09:52.559 --> 0:09:56.000 not something that I ever really felt. I was always 0:09:57.320 --> 0:10:00.960 you know, I always enjoyed the week spot spent. So 0:10:01.280 --> 0:10:03.280 let me rephrase that. I never spent a lot of 0:10:03.280 --> 0:10:06.319 time in the city socializing with the people that worked 0:10:06.320 --> 0:10:08.960 in the city because they weren't really my type of people. 0:10:09.320 --> 0:10:11.080 You know. I grew up on a council estate in 0:10:11.120 --> 0:10:13.760 Watford and I used to like going back home at 0:10:13.760 --> 0:10:16.240 the weekends to go out with my friends rather than 0:10:16.280 --> 0:10:18.079 spending my time in the city. For me, it was 0:10:18.200 --> 0:10:21.880 very much a job of work, and friends that I 0:10:22.040 --> 0:10:24.640 made in the city at the time were always quite transient, 0:10:24.840 --> 0:10:27.160 and I think it is a transient industry as people 0:10:27.640 --> 0:10:30.440 move and push on within that. So there wasn't you know. 0:10:30.920 --> 0:10:34.600 I just don't agree with the class element or a 0:10:34.640 --> 0:10:38.960 class warfare element of it that is depicted in the 0:10:39.000 --> 0:10:41.079 book and some of the media made a big story 0:10:41.120 --> 0:10:43.280 of at the time. It's just not the way that 0:10:43.320 --> 0:10:46.559 I felt. I always felt very welcome. I was very socially. 0:10:46.559 --> 0:10:49.000 A debt which I think was to you know, in 0:10:49.040 --> 0:10:52.360 my favor throughout that whole period enabled me to move 0:10:52.440 --> 0:10:55.200 in some of the circles that they did and transgress 0:10:55.280 --> 0:10:57.800 some of the rules that I did throughout that period 0:10:57.800 --> 0:11:00.560 as well. But yeah, no, look, I never it was 0:11:01.000 --> 0:11:04.960 you know, working class versus upper class scenario, which was 0:11:05.360 --> 0:11:07.760 which was maybe made a bit more of at the time. 0:11:07.880 --> 0:11:09.840 At the time, you know, it was certainly a feature, 0:11:09.880 --> 0:11:11.959 wasn't it in the reporting and in the book, as 0:11:11.960 --> 0:11:15.360 you say, But that idea of that trajectory, I mean, 0:11:15.480 --> 0:11:17.319 leave you know, you left school. I think you left 0:11:17.320 --> 0:11:19.160 school at eighteen. You certainly didn't go to university. You 0:11:19.160 --> 0:11:22.319 went straight into a bank, not Bearings to start with. 0:11:22.400 --> 0:11:24.080 You had a couple of different jobs before you got 0:11:24.120 --> 0:11:26.640 to Bearings. But that kind of route in the city, 0:11:27.040 --> 0:11:29.080 I mean, even the kind of type of trading that 0:11:29.120 --> 0:11:31.760 you were doing. That's it's the open outcross all of that. 0:11:31.800 --> 0:11:34.480 It's kind of it's disappeared. Yeah, it's a thing of 0:11:34.520 --> 0:11:37.319 the past, isn't it. But is that route still open 0:11:37.360 --> 0:11:39.160 of that kind of coming into the city and being 0:11:39.200 --> 0:11:40.600 able to make it. 0:11:41.840 --> 0:11:45.400 No, I think it's it's a far harder route these days. 0:11:45.440 --> 0:11:47.600 And I think if you go back to that period, 0:11:47.679 --> 0:11:49.680 if you look at you know, you know, I started 0:11:49.720 --> 0:11:52.920 working the city in nineteen eighty five, so you've got 0:11:53.000 --> 0:11:55.760 Big Bang nineteen eighty seven. So they've got lots of 0:11:55.840 --> 0:11:59.240 new banks coming into the city. They're all looking for staff. 0:11:59.320 --> 0:12:01.600 So you used to get off of the off of 0:12:01.600 --> 0:12:03.760 the Tube Bank and you'd be handed one of those 0:12:04.280 --> 0:12:06.800 you know, little magazines and it'd be full of jobs 0:12:06.840 --> 0:12:09.079 and you could you could quite easily change a job 0:12:09.320 --> 0:12:11.440 every couple of weeks if you wanted to, with a 0:12:11.480 --> 0:12:15.120 tiny bit of experience. Tiny bit of experience, and you know, 0:12:15.160 --> 0:12:17.880 that was enough to give you that opportunity to move 0:12:17.920 --> 0:12:21.160 into another organization. So I was two years at Coots 0:12:21.160 --> 0:12:24.360 and Company just down the road here, you know, moved 0:12:24.360 --> 0:12:27.000 to Morgan Stanley, worked for Morgan Stanley for two years 0:12:27.040 --> 0:12:30.200 and then then was headhunted to Bearings. It was, you know, 0:12:30.720 --> 0:12:34.440 there was lots of opportunity, and I think you can't 0:12:34.559 --> 0:12:38.160 take that away from some of the things that happened 0:12:38.200 --> 0:12:40.640 during that period. You you know, you've got this process 0:12:40.640 --> 0:12:44.360 of deregulation where everything is you know, ramping up in 0:12:44.440 --> 0:12:47.600 terms of how big the city is becoming and how 0:12:47.600 --> 0:12:50.400 many people are working in the city, and you know, 0:12:50.880 --> 0:12:53.720 the systems, the controls, the policies weren't in place in 0:12:53.760 --> 0:12:56.400 some of those organizations in order to safeguard it. 0:12:56.480 --> 0:12:59.640 Do you feel like systems and controls are better now 0:13:00.080 --> 0:13:02.520 that there are more safeguards in place to prevent this 0:13:02.640 --> 0:13:03.199 kind of thing? 0:13:03.320 --> 0:13:06.400 Yeah, one hundred percent. You you know, like I speak 0:13:06.440 --> 0:13:10.800 at lots of different events and conferences where you know compliance, 0:13:10.920 --> 0:13:13.839 risk management, governance and the theme, and you know you 0:13:14.679 --> 0:13:18.840 can't underestimate how many people work in those areas now. 0:13:19.160 --> 0:13:20.760 You know, like when I think back to my time 0:13:20.760 --> 0:13:23.720 at Bearings, we had one compliance officer I think she 0:13:23.880 --> 0:13:25.640 was also the risk manager for two and a half 0:13:25.720 --> 0:13:28.920 thousand people. You walk into most offices now in Canary 0:13:28.960 --> 0:13:32.520 Warfare around this area and there's three thousand people working 0:13:32.520 --> 0:13:35.600 in compliance. So you know it's come on in massive 0:13:35.679 --> 0:13:38.440 leaps and bounds since that time. The quality of people 0:13:38.480 --> 0:13:41.600 are better, they're better educated, you know, they're getting better 0:13:41.679 --> 0:13:44.360 training within those organizations. But when you still have an 0:13:44.400 --> 0:13:48.800 episode like mcquarie happening within the last two years, where 0:13:48.800 --> 0:13:51.520 there were four hundred and fifty fictitious traits, you have 0:13:51.640 --> 0:13:54.680 to question how on earth that happens? And no, I 0:13:54.679 --> 0:13:55.199 suppose no. 0:13:55.360 --> 0:14:00.720 The Trump administration is looking to deregulate quite fast. There's 0:14:00.760 --> 0:14:03.360 potentially new risk going to a merger and things like 0:14:03.440 --> 0:14:06.880 AI and crypto. I mean, do you worry about the 0:14:06.920 --> 0:14:09.800 regulatory environment and the level and the level of risk. 0:14:09.920 --> 0:14:13.400 I don't worry for me, you know, maybe you I 0:14:13.440 --> 0:14:17.600 think there's a worry for the markets. You know, there's 0:14:17.640 --> 0:14:21.440 always these niche areas that throw up anomaly. So you've 0:14:21.440 --> 0:14:24.640 got you know, you had the episode with Archagos a 0:14:24.640 --> 0:14:27.480 few years ago, You've got Credit Suisse who've gone by 0:14:27.520 --> 0:14:29.720 the wayside over the last number of years. You've got 0:14:29.760 --> 0:14:32.480 this thing that's happened with the McQuary. So is it 0:14:32.520 --> 0:14:34.480 one hundred percent safe? Absolutely not. 0:14:35.320 --> 0:14:38.120 Well, we're also at a very We're at an interesting point, 0:14:38.360 --> 0:14:41.520 aren't we, in terms of the Trump administration wanting to 0:14:41.640 --> 0:14:45.000 roll back the financial crisis era regulations and that that 0:14:45.160 --> 0:14:47.280 is going to surely put pressure on the UK and 0:14:47.680 --> 0:14:50.360 Europe to do the same. And for Britain it's very 0:14:50.400 --> 0:14:53.280 much about trying to you know, financial service has been 0:14:53.320 --> 0:14:56.840 quite unloved for around Brexit and for quite a long 0:14:56.840 --> 0:14:59.880 time now. It's perhaps needed in order to boost second 0:15:00.240 --> 0:15:03.240 growth importance, So you know, is there a concern that 0:15:03.240 --> 0:15:05.960 that is going to become more of a dominant theme again? 0:15:06.000 --> 0:15:07.640 How do you get a grip of that. 0:15:08.360 --> 0:15:11.040 Well, I think the elastic band went too far in 0:15:11.080 --> 0:15:14.080 the opposite direction. When you had the global financial collapse 0:15:14.120 --> 0:15:16.760 and you've got Dodd Frank and everything else that came 0:15:16.800 --> 0:15:19.280 in around that time, the controls were just too much 0:15:20.040 --> 0:15:22.240 and that restricted a lot of business getting done. And 0:15:22.280 --> 0:15:25.000 I think, you know, there's definitely a need to pull 0:15:25.080 --> 0:15:26.880 back a little bit on that. And you've seen that 0:15:26.920 --> 0:15:29.280 happen over the last number of years. Whether you're going 0:15:29.320 --> 0:15:32.080 to go to full deregulation, quite how far it's going 0:15:32.160 --> 0:15:35.440 to go, is going to open, is going to open 0:15:35.560 --> 0:15:38.840 certain doors to allow things to go wrong again, And 0:15:39.280 --> 0:15:41.240 you know, you've got to be very very careful when 0:15:41.240 --> 0:15:46.560 people talk about deregulation. You know, that throws me back 0:15:46.560 --> 0:15:48.720 to that period in nineteen eighty seven when I was 0:15:48.760 --> 0:15:51.800 starting in the city and it was all of that opportunity, 0:15:52.320 --> 0:15:55.200 you know, the opportunity to move and move into the city, 0:15:55.280 --> 0:15:59.240 get jobs, move on within the different organizations, but also 0:15:59.280 --> 0:16:01.960 the controls systems weren't good enough. If you're getting that 0:16:02.080 --> 0:16:06.360 right and the industry is perfectly safe, then deregulate and 0:16:07.200 --> 0:16:09.840 pull back on some of that regulation. But mcquarie is 0:16:09.880 --> 0:16:11.880 the one that worries me. How can you have four 0:16:11.960 --> 0:16:15.320 hundred and fifty fictitious trades? It is just so basic 0:16:15.720 --> 0:16:20.120 an oversight. This is like kid stuff. And yet you've 0:16:20.120 --> 0:16:23.560 got an organization that's missed four hundred and fifty trades. 0:16:23.840 --> 0:16:27.760 They haven't reconciled them, they've not been able to see 0:16:27.800 --> 0:16:30.280 that they've they're not been able to guarantee any of 0:16:30.280 --> 0:16:33.640 those trades. Yet. This has happened less than two years ago. 0:16:33.520 --> 0:16:35.800 And I'm sure that Macquarie would want to defend themselves 0:16:35.880 --> 0:16:37.600 on that point and give their explanation. 0:16:37.680 --> 0:16:39.880 I'm sure that I'm sure they would want to, but 0:16:39.920 --> 0:16:42.680 they wouldn't be able to. They are fictitious trades. The 0:16:42.760 --> 0:16:46.400 key is in the word fictitious. They didn't exist, So 0:16:46.440 --> 0:16:49.280 how did you allow them to survive as an offset 0:16:49.560 --> 0:16:53.240 for a young trader within your organization for so long? 0:16:53.600 --> 0:16:54.720 That's where you get fined. 0:16:55.360 --> 0:16:57.640 Do you think what happened there is a sign of 0:16:57.840 --> 0:17:00.560 wider risks that are there in the end history and 0:17:00.600 --> 0:17:03.080 that that's just the tip of an iceberg? 0:17:03.200 --> 0:17:07.680 Or no, No, I think it's an isolated case, as 0:17:07.840 --> 0:17:10.160 was bearings all of those years ago. Now you've got 0:17:10.480 --> 0:17:12.760 you know, you've got a number of rogue trading episodes 0:17:12.800 --> 0:17:15.240 that spun off of the back of bearings and came 0:17:15.280 --> 0:17:19.280 to light because of bearings. You've got haman Arka at 0:17:19.320 --> 0:17:23.000 summertomo Igucci at Daiwa. You know, these were going on 0:17:23.040 --> 0:17:25.600 at the same time, so it wasn't an isolated incident. 0:17:25.840 --> 0:17:28.639 I think mcquarie is an isolated incident. But you know, 0:17:28.760 --> 0:17:32.840 one incident is too many. Maybe I shouldn't use McQuary's 0:17:32.920 --> 0:17:33.480 name so much. 0:17:36.000 --> 0:17:39.080 One of your jobs is to investigate financial misconduct via 0:17:39.240 --> 0:17:40.480 via red myst. 0:17:40.640 --> 0:17:44.560 Yeah, what does your work there involve. Well, my part 0:17:44.560 --> 0:17:48.240 of the work is probably more forensic. It goes back to, 0:17:48.880 --> 0:17:51.000 you know, looking at what my skill sets were when 0:17:51.000 --> 0:17:54.399 I worked in Coots and Morgan Stanley, and just looking 0:17:54.440 --> 0:17:58.200 at data and conversations and other things that are going 0:17:58.240 --> 0:18:02.600 on where there is something conduct within within organizations, and 0:18:02.680 --> 0:18:05.440 just pulling all that together. You know, I've always thought 0:18:05.520 --> 0:18:08.600 that I had a fairly photographic memory, so I'm using 0:18:08.640 --> 0:18:11.960 that again and just pulling those strands of information and 0:18:12.000 --> 0:18:16.879 seeing where we can expose misconduct within organizations. 0:18:16.200 --> 0:18:18.760 And where are you finding is the most prevalent place 0:18:18.840 --> 0:18:21.040 for that kind of misconduct, So where are. 0:18:20.920 --> 0:18:24.159 The weak links. It's all over the place really, to 0:18:24.200 --> 0:18:26.280 be honest with you. We look at some things which 0:18:26.680 --> 0:18:30.600 involve a certain amount of sexual harassment. There are certain 0:18:30.640 --> 0:18:33.680 episodes where that comes to the fore we're seeing that 0:18:33.800 --> 0:18:36.840 being quite prevalent at the moment. We look at other 0:18:36.920 --> 0:18:42.000 cases which have resulted, you know, maybe in some trading 0:18:42.080 --> 0:18:47.280 episodes that aren't correctly following procedure, where there's a lack 0:18:47.320 --> 0:18:50.520 of surveillance over some of how those trades are being 0:18:51.600 --> 0:18:54.600 trades are being followed through the organization. It's really quite 0:18:54.640 --> 0:18:57.119 widespread and it's quite interesting and it's good for me 0:18:57.280 --> 0:18:59.200 and you know, I'm enjoying it at the moment. 0:19:00.600 --> 0:19:03.639 Back to financial services in terms of the UK regulator, 0:19:03.800 --> 0:19:06.520 I mean we've seen, for example, the SEC chair go 0:19:06.720 --> 0:19:09.480 In the US, there has been some pressure on the fcchair. 0:19:09.520 --> 0:19:12.640 And there's always criticism of the UK regulator. I mean, 0:19:12.840 --> 0:19:15.160 back when it was the FSA, you were quite critical 0:19:15.200 --> 0:19:17.800 of it in your historic case, but you've also been 0:19:17.840 --> 0:19:20.520 critical of it recently in the kind of FCA. Guys, 0:19:21.280 --> 0:19:24.760 how much robustness is there for the FCA. You know, 0:19:24.800 --> 0:19:29.960 the regulators always are quite criticized. They're often also quite 0:19:30.000 --> 0:19:34.280 underfunded in lots of ways and are limited in their scope. 0:19:34.320 --> 0:19:37.240 For example, how do you think the UK's regulatory system 0:19:37.600 --> 0:19:38.800 is measuring up now. 0:19:39.440 --> 0:19:41.960 I think it's improved a lot. I think there needs 0:19:41.960 --> 0:19:44.760 to be you know, there needs to be more communication 0:19:44.920 --> 0:19:47.639 and conversations with the banks that they need to work together. 0:19:47.680 --> 0:19:51.919 I think different regulators are better at doing that, you know, 0:19:52.920 --> 0:19:56.000 allying with some of the banks and bringing better controls 0:19:56.040 --> 0:19:59.040 to the FOE. I'm not sure, you know, obviously I'm 0:19:59.080 --> 0:20:01.879 a million miles away from regulation these days. You know, 0:20:01.880 --> 0:20:03.760 I would have been a bit closer to it all 0:20:03.840 --> 0:20:06.240 of those years ago, But you know, it's still a 0:20:06.320 --> 0:20:09.159 job of work to be done. They're always slightly behind 0:20:09.160 --> 0:20:12.159 the curve. That's always going to be the case. I 0:20:12.160 --> 0:20:13.680 think if you look at the number of people who 0:20:13.720 --> 0:20:16.040 work in the FCA and how many people work in 0:20:16.119 --> 0:20:19.360 the City of London, there's a huge disparity. So it's 0:20:19.440 --> 0:20:22.800 very difficult to man mark what's going on within those organizations. 0:20:22.840 --> 0:20:24.919