what is a rogue trader 
a rogue trader is a trader who acts recklessly and independently of others usually to the detriment of the institution that employs the trader and perhaps clients rogue traders typically play with high risk investments that can produce huge losses or gains rogue traders though are only labeled as such if they lose which generates incentives that create moral hazard if their trades are enormously profitable no one calls them rogue and in fact they are more likely to receive a huge bonus but if they re risky bets lose they are rogue and can cost the firm millions or even billions of dollars in losses rogue traders explainedbanks over the years have developed sophisticated value at risk var models to control the trading of instruments which desks can trade them when they can trade them and how much in a given period in particular the limit of a trade is carefully set and monitored not only to protect the bank but also to satisfy regulators internal controls however are not 100 foolproof a determined trader can find a way to circumvent the system to try to reap outsized gains often they are caught in bad trades and then forced by regulators to be publicly exposed to the embarrassment of the bank one has to wonder how many small time rogue traders are quietly fired by a bank because the bank does not want the negative publicity that comes with news that internal trading controls were not properly developed or implemented examples of rogue tradersamong the most notorious rogue traders in recent years is nick leeson a former derivatives trader at the singapore office of britain s barings bank in 1995 leeson incurred heavy losses through the unauthorized trading of large amounts of nikkei futures and options leeson took large derivative positions on the nikkei that leveraged the amount of money at stake in the trades at one point leeson had 20 000 futures contracts worth more than 3 billion on the nikkei a large chunk of the losses came from the downturn in the nikkei after a major earthquake in japan caused a broad based sell off in the nikkei within a week the total loss to the 233 year old barings bank was well over 1 billion and eventually led to its bankruptcy leeson was charged with fraud and served several years in a singapore prison more recent examples include bruno iksil the london whale who racked up 6 2 billion in losses in 2012 at jp morgan and jerome kerviel who was partly or wholly responsible for more than 7 billion in losses at soci t g n rale in 2007 jp morgan ceo jaime dimon was slow to realize the magnitude of the london whale losses first calling the incident a tempest in a teapot later to his chagrin he had to admit the truth about his bank s rogue trader 