Rogue Wheat Trader Blamed For $141 Million Loss

AP:

A rogue trader at MF Global Ltd. rang up $141.5 million in losses on the broker's account this week, the company said Thursday, a black eye that cost the company almost a fifth of its market value.

The Bermuda-based broker said on Wednesday morning it discovered Evan Dooley, a trader at the company's Memphis, Tenn., branch, trading wheat contracts in amounts that exceeded how much he was allowed to trade.

MF Global said it fired Mr. Dooley and liquidated the wheat contracts, which led to a $141.5 million loss. An entry-order system that should have blocked the trades failed, the company said.

Attempts to locate an Evan Dooley in the Memphis area for comment were unsuccessful.

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Comments

[Americanabroad]

In an economy where data entry workers get monitored for every keystroke they make per second, internet activities get monitored, video cameras record what entry-level workers do, and assembly line workers can't take a leak without it being noted, how the hell do all these traders get away with making deals for millions and sometimes billions beyond their authorization? Where the hell is the oversight?

[WIpatriot]

Oh, it's there, alright. These guys can't even make up a believeable story.

[wadenelson1]

They only become rogues when they start losing. When their company is MAKING OUT LIKE GANGBUSTERS nobody says a word about these fellows. lol

[mrcontinental]

This smells, observe:
"Mr. Dooley had bought a few thousand lots of wheat futures contracts on the Chicago Board of Trade, MF Global said. The price of wheat has surged in the past month because of constraints to global supply and swelling demand from China."

"MF Global’s chief executive, Kevin Davis, said Mr. Dooley did not have nearly enough cash to support such a big position, and the computer system should have nixed the trade".

If he was long what was the problem? He doesn't have to take delivery and with wheat going through the roof he could have easily sold off enough to cover himself. And if he had gone short he would have had a stop placed at some point to guarantee only modest loses.

It sounds to me like somebody made these folks an offer that they couldn't refused and they had to stage this mess as a cover up. And you know damn well they have insurance to cover it. It's about to get really ugly out there folks.

[WIpatriot]

Exactly.

[mrcontinental]

This is only the beginning of stories like this. I guarantee that you are going to see stuff coming that will be blamed on "hackers" from the former eastern bloc that some how circumvented the system and "stole" millions and other such nonsense when the bloodletting begins in earnest.

And there is a wheat shortage going on as well...imagine that.

[WIpatriot]

Boggles the mind, MrC. Just another way to steal money..

[PacificGatePost]

Is just me or are we all not a little suspicious when we see the term "Rogue Trader" in the media?

There is nothing rogue about a trader. Rogue is both a defamatory term and a "scapegoat" term. Traders are encouraged to take risks. They don't leave their computers to go to the bathroom without their bosses knowing, and they certainly don't affect trades in a vacuum.

Risk has its downsides, especially in a volatile economy. Rogue is a designation that although it implies the individual is a scoundrel, it also suggests the CEO doesn't want his bonus affected and needs to deflect blame. Let's promote a little more ethical behavior . . . . http://pacificgatepost.blogspot.com/2008/02/corporate-ethics.html

Ethical behavior starts at the top.