NEW YORK: Nick Leeson, the former derivatives trader who brought down Barings Bank, has joined a corporate intelligence firm run by ex-Black Cube operative Seth Freedman.
Leeson, 56, will investigate financial misconduct with the London-based Red Mist Market Enforcement Unit to help investors seek compensation in court when regulators are unable to help, he said in an interview.
“I have also been on the other side of the equation and understand the psychology of some of the people involved,” the one-time star trader said.
Leeson’s website describes him as the “original rogue trader.”
He amassed losses of about US$1.4bil (RM6.3bil) when working for Barings in Singapore in 1995, leading to the bank’s failure and eventual sale to ING Groep NV for £1 (RM5.47).
A film was made in 1999 based on his book about the scandal, starring Ewan McGregor.
Having served about four years in a Singaporean prison for attempting to cover up his bad trades, he now lives in the Irish city of Galway.
There, he worked for a debt counselling company and the Galway United Football Club, where he was chief executive officer from 2007 until 2011.
Freedman’s career, meanwhile, has included time as an undercover investigator for the disgraced movie producer Harvey Weinstein.
In 2018 he left Black Cube, which is run by veterans of Israeli intelligence, and set up Red Mist in 2021.
“Leeson, who’s obviously had his own clashes with the regulators, knows the city inside and out.
“He’s brilliant at forensic work,” Freedman said in an interview.
“When it comes to listed company fraud and unravelling what’s going on, you need to have people who are experts in markets.”
The pair were brought together by Mike Whitworth, a former engineer and investor based in Cyprus who works with Red Mist as a forensic investigator.
They said their clients include Nobu Su, a Taiwanese former shipping tycoon who served prison time for contempt of court and who claims a UK bank failed to protect his interests in the aftermath of the 2008 financial crisis.
Leeson said the firm will look for opportunities where rising interest rates expose weaknesses in businesses that grew fast in better times.
“There will be more of these cases where people have invested in companies that halve in value, and they may have been coerced into the investment,” he said.
The agency will help clients with no recourse from regulators, Freedman said.
“We get the job done, and we get the investors their compensation. We are essentially guns for hire.”
This is not the first time Red Mist has brought a convicted trader on board.
In 2021, it hired the former UBS Group AG and Citigroup Inc trader Tom Hayes, who was jailed for manipulating the London interbank offered rate. Hayes maintains his innocence and is fighting to overturn his conviction.
Leeson hopes his past will help him track down people involved in similar activities.
“It often doesn’t start out as a fraud. In the beginning, it’s a decision between pleasing everyone around them or highlighting the fact that they’re failing and something is going wrong with the organisation.
“And that’s kind of how it happened at Barings,” he said.
“That will always be an intense embarrassment. But you’ve got to deal with that and move on. It doesn’t define me as a person.” — Bloomberg