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10 Biggest Losers in Finance

Rogue trading makes headlines. The idea of a single person losing millions andoccasionally billions of dollars is always interesting, but it is even more so when that

person is losing other people's money. In this slideshow, we look at 10 traders and fund

managers that became famous for their very public losses.

Nick Leeson: Lost $1.3 Billion Nick Leeson is one of the most famous rogue traders of all time. In 1992, Leeson was a28-year-old rising star, with his magic touch allowing him to become the head of BaringsBank operations on the Singapore International Monetary Exchange.

Leeson incurred heavy losses through unauthorized trading of large amounts of Nikkeifutures and options, and hid his losses in a secret account. The breaking point was whenhe placed a short straddle on the Nikkei. An earthquake hit Kobe the next day - sendingthe Nikkei lower - and resulted in a major loss. Leeson then made even riskier bets,

leading to further loses and inevitably the bankruptcy of Barings in 1995.John Rusnak: Lost $691 MillionJohn Rusnak was hired by Allfirst Financial, a subsidiary of Allied Irish Bank, in 1993 asa currency trader. In 1996, Rusnak began taking larger risks on the Japanese yen. By1997, he had lost $29.1 million, which grew to $300 million in 2001. He managed to hidehis losses and make it appear as though the bank was making money, which resulted in acollection of more than $433,000 in bonuses.

After writing $300,000 in options, his total losses reached $691 million. Rusnak receiveda 7.5-year jail sentence and is on the hook for paying back the full $691 million.

Yasuo Hamanaka: Lost $2.6 BillionAlso known as Mr. Copper, Yasuo Hamanaka was a trader for Sumitomo Corporationspecializing in copper. At one time, he was said to control over 5% of the world's copper market.

The range of his activities from 1986 to 1996 have raised questions about whether he wasa rogue trader or a member of a price-fixing conspiracy. Hamanaka served seven years of his eight-year prison sentence from 1998 to 2005.

Liu Qibing: Unconfirmed Losses Up To $1 BillionLiu Qibing (a man who may or may not have been a senior metals trader for the Chinesegovernment), took a huge bet that copper prices were going to fall. Consequently, copper

prices rose substantially, leading to massive losses.The paper trail led back to the Chinese State Reserve Bureau, and the Chinesegovernment tried to depress prices with claims that copper reserves were five-times larger than previously estimated, and denied Qibing has even existed to place a short. Becauseof the incongruous information from the Chinese government, the extent of losses are stillup for debate, as are the mysterious whereabouts of Liu Qibing

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Brian Hunter: Lost $6.5 BillionBrian Hunter was a trader for the hedge fund Amaranth Advisors. He took a gamble innatural gas futures, and after hurricanes Katrina and Rita hit in 2005, the price of naturalgas rose nearly three-fold, earning Amaranth huge profits, and attracting more investors.In March of 2006, Traders Monthly named Hunter No. 29 on their list of top traders.

Hunter placed the same trades in natural gas futures in 2006. Consequently, as the threatof severe hurricanes diminished, so did the price of natural gas, resulting in losses of over $6 billion for Amaranth.

Jerome Kerviel: Lost $7.1 BillionIn 2008, Jrme Krvil took the title as the worst rogue trader in history, losing anestimated $7.1 billion dollars for Socit Gnrale. His losses occurred fromunauthorized speculation in European futures. Since he was initially employed withSocit Gnrale in its compliance department before becoming a trader, he was able tomanipulate the system and hide his losses.

John Meriwether: Lost $5.8 Billion

In 1994, John Meriwether founded the Long-Term Capital Management (LTCM) hedgefund, which managed more than $100 billion in assets. LTCM attracted investors withtheir promising arbitrage strategy that could theoretically reduce the risk level to zero. In1998, LTCM made a bet that the troubled Russian financial markets would revert back tonormal, and took a large, unhedged position Russian debt. The fund ultimately collapsedwhen Russia defaulted on its debt.

Fears of a larger financial crisis spurred the U.S. federal government to step in with a$3.65 billion bailout loan once LTCM's losses reached $4 billion. This allowed LTCM toliquidate in an orderly manner in early 2000.

Julian Robertson: Lost $17 Billion

Julian Robertson is one of the few losers who also made the greatest investors list. Hestarted the hedge fund firm Tiger Management in 1980. Between 1980 and 1996, heturned an $8 million investment into $7.2 billion. Between 1998 to 2000, Robertsonfailed to participate in the tech-stock craze (or tech bubble), which he deemed irrational.A value investor, Robertson placed big bets on stocks through a strategy that involved

buying what he believed to be the most promising stocks, and shorting stocks he viewedas the worst.When Robertson shorted tech stocks during the tech bubble, the greater fool theory

prevailed and tech stocks continued to soar. As a result, Tiger Management sufferedmassive losses, with all funds closing in 2000 at a value of $6 billion (previously worth$23 billion in 1998).

Peter Young: Lost $400 Million (Pounds)

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Peter Young was a fund manager for Morgan Grenfell Asset Management (later acquired by Deutsche Bank). In 1996, Young was fired when it was discovered the EuropeanGrowth Trust fund under his management had some irregularities.

Young had secretly created several companies in order to exercise stock warrants for his

benefit. In 1998, Young was charged with conspiracy to defraud; however, in 2000Young was found mentally ill and unfit to stand trial due to self-inflicted injuries and anappearance at the courthouse dressed as a woman and answering to the name "Elizabeth".

Hunt Brothers: Lost Undisclosed AmountBrothers Nelson Bunker Hunt and William Herbert Hunt attempted to corner the silver market by purchasing approximately 100 million ounces of silver bullion throughout the1970s, causing silver prices to soar in January 1980.

Silver prices ultimately crashed on March 27, 1980, on a day now deemed as Silver Thursday. Nelson Hunt was fined $10 million by the United States Commodity Futures

Trading Commission for attempting to control silver prices.No Guarantee That Risk = RewardWhen a trader begins to feel that he or she has a special gift for sniffing out money-making positions, it can be a dangerous situation. Unfortunately, luck is a fickle friend.When these formerly 'magical' traders start losing, they often look for ways to magnifytheir bets and win back their losses. Aside from the financial damages that rogue tradersinflict upon the market, they do serve one very important function; they remind us thatseeking exceptional returns means taking on equally exceptional risk.