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Drunk Trader Moves Oil Prices – What Next?

We have written a string of posts recently on the dark side of trading with the UBS rogue trader and the SEC case against another ponzi-like scheme out of Atlanta.

You Have To Want To Lose $2 billion

Character Is What You Do When No One Is Looking

Well it doesn’t stop! In a recently revealed trading incident, a London Broker for PVM Oil Futures, traded company funds while drunk, moving the oil price more than $1.50 and when all was said and done losing $9,763,252.

What’s more as a broker he was only authorized to enter trades on behalf of his clients. Yet he was able it seems, with ease, to trade PVM’s risk capital.

The broker, Steve Perkins had one savage hangover phone call from his boss the morning after asking what he’d done with $520 MM of the firm’s money.

Initially he lied saying he had been trading alongside a client. The story fell apart when he couldn’t put the client on the phone to corroborate his story.

The rub of it all is that he had been drinking all weekend at a company golf weekend which he was rounding out with a day off. He traded $520 MM in orders through the night being responsible for 69% of the total traded volume.

Early the following morning he sent a text to the Managing Director trying to pull a sick day when presumably it all began to soak in.

Despite the losses he will receive a fine from the FSA (the UK equivalent to the SEC) of only £75,000 (just over $121,000) likely reduced from £150,000 due to financial hardship.

Here we have yet another case of both trading without emotional or moral reflection and another company whose risk management procedures are ridiculously lax.

Although in the same industry it’s staggering the difference all too often seen between independent traders and those trading OPM.

Since Intentions = Results; both the broker and firm are long overdue some introspective work.

How a broker spent $520 MM in a drunken stupor and moved the global oil price

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