PICKING UP THE PIECES The Critical Blunder That Brought Down a British Institution

By MICAHEL A. HILTZIK; JAMES F. PELTZ

TIMES STAFF WRITERS

As regulators, executives and markets try to sort out the futures and options trading that brought down Barings, the institution’s critical blunder is becoming increasingly clear.

The bank made 28-year old Nicholas W. Leeson responsible not only for trading futures and options in its Singapore office, but for “cleaning” –that is, reconciling the firm’s holdings with its books.

 “That meant he was making his own margin calls,” said Leslie Rahl, President of Capital Market Risk Advisors, a derivatives consultant.

March 1, 1995