The most effective traders, says Hugo Pound, managing director of management consultants RDI, tend to be disciplined, innovative and brave. They enjoy challenges and pushing boundaries. Unfortunately, that profile also fits a different breed of trader – the rogue, writes Tom Drew.
Pound is a psychologist, and part of his job is to weed out potential troublemakers from top banks’ new recruits: “The problem is that after some success, they realise that there is more personal reward available through fraud than they can ever achieve through the system.”
He says fraudulent traders can be divided into three psychological profiles:
- the rogue trader,
- the cover-up artist, and
- the benevolent rebel.
The cover-up artist has been playing double or quits and keeps on losing, “so they carry on digging a deeper and deeper hole … in the hope that they will sort themselves out”.
And the benevolent rebel breaches boundaries set by an employer or government authority because he believes that, eventually, it will all come good.
Using Pound’s definitions, Nick Leeson was not a rogue trader at all, but a cover-up artist. As such, Pound thinks he was treated harshly, absorbing most of the blame for a bank whose systems and controls had failed. Jérôme Kerviel, apparently driven by a desire for corporate profit, not personal gain, falls into the benevolent rebel category. “I personally don’t have any experience of traders who have knowingly stepped over the boundary for their own benefit,” says Pound.
He believes it is difficult to measure the incidence of benevolent rebels because much of the time they are successful and stay unnoticed – or are even rewarded. “Banks don’t want to reward the safe traders because they’re not the ones who make the money. So it’s very difficult to get a line between rewarding real, brave [workers] and the people who go too far.”
http://www.ft.com/cms/s/2/2d78785c-e755-11dd-aef2-0000779fd2ac.html
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