International symposium on derivatives and risk management: Risk management and the "rogue" trader: Trading-related losses, director & officer liability, prudent risk management, insurance risk transfer, the role of education

Fordham Law Review

Volumn 69, Issue 2, 2000, Pages 329-344

  Grange, Jeffrey S ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0346346278     PISSN: 0015704X     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Conference Paper

References (63)

1. See Neil D. Levin, Insurance Supervision Meets the Marketplace: The Regulatory Response to Derivatives as a Risk Management Tool in the Insurance Industry, 69 Fordham L. Rev. 17, 21-24 (2000).
2. For example, see Gerard Baker & Maggie Urry, Daiwa's Road to Financial Disaster: Gerard Baker and Maggie Urry Explain the Extraordinary Events Behind the Losses at the Japanese Bank, Financial Times (London), Sept. 30, 1995, at 7; John Gapper & Nicholas Denton, Leeson's Bid to be a Star Led to Bank's Crash: Trader 'Subsidised' Sale of Derivatives, Financial Times (London), Sept. 18, 1996, at 1; John Gapper & Christopher Parkes, Top Banks Allege Big Frauds by Employees: Credit Lyonnais and Deutsche Bank Lose Millions, Financial Times (London), Apr. 8, 1995, at 1; Rob Garver, Operational Lapses Cost the Industry $7 Billion, American Banker, Nov. 18, 1999, at 1; Brian M. Sullivan, Blame Lax Management, Not Derivatives, American Banker, Mar. 31, 1995, at 18.
3. For example, see Gerard Baker & Maggie Urry, Daiwa's Road to Financial Disaster: Gerard Baker and Maggie Urry Explain the Extraordinary Events Behind the Losses at the Japanese Bank, Financial Times (London), Sept. 30, 1995, at 7; John Gapper & Nicholas Denton, Leeson's Bid to be a Star Led to Bank's Crash: Trader 'Subsidised' Sale of Derivatives, Financial Times (London), Sept. 18, 1996, at 1; John Gapper & Christopher Parkes, Top Banks Allege Big Frauds by Employees: Credit Lyonnais and Deutsche Bank Lose Millions, Financial Times (London), Apr. 8, 1995, at 1; Rob Garver, Operational Lapses Cost the Industry $7 Billion, American Banker, Nov. 18, 1999, at 1; Brian M. Sullivan, Blame Lax Management, Not Derivatives, American Banker, Mar. 31, 1995, at 18.
4. For example, see Gerard Baker & Maggie Urry, Daiwa's Road to Financial Disaster: Gerard Baker and Maggie Urry Explain the Extraordinary Events Behind the Losses at the Japanese Bank, Financial Times (London), Sept. 30, 1995, at 7; John Gapper & Nicholas Denton, Leeson's Bid to be a Star Led to Bank's Crash: Trader 'Subsidised' Sale of Derivatives, Financial Times (London), Sept. 18, 1996, at 1; John Gapper & Christopher Parkes, Top Banks Allege Big Frauds by Employees: Credit Lyonnais and Deutsche Bank Lose Millions, Financial Times (London), Apr. 8, 1995, at 1; Rob Garver, Operational Lapses Cost the Industry $7 Billion, American Banker, Nov. 18, 1999, at 1; Brian M. Sullivan, Blame Lax Management, Not Derivatives, American Banker, Mar. 31, 1995, at 18.
5. For example, see Gerard Baker & Maggie Urry, Daiwa's Road to Financial Disaster: Gerard Baker and Maggie Urry Explain the Extraordinary Events Behind the Losses at the Japanese Bank, Financial Times (London), Sept. 30, 1995, at 7; John Gapper & Nicholas Denton, Leeson's Bid to be a Star Led to Bank's Crash: Trader 'Subsidised' Sale of Derivatives, Financial Times (London), Sept. 18, 1996, at 1; John Gapper & Christopher Parkes, Top Banks Allege Big Frauds by Employees: Credit Lyonnais and Deutsche Bank Lose Millions, Financial Times (London), Apr. 8, 1995, at 1; Rob Garver, Operational Lapses Cost the Industry $7 Billion, American Banker, Nov. 18, 1999, at 1; Brian M. Sullivan, Blame Lax Management, Not Derivatives, American Banker, Mar. 31, 1995, at 18.
6. For example, see Gerard Baker & Maggie Urry, Daiwa's Road to Financial Disaster: Gerard Baker and Maggie Urry Explain the Extraordinary Events Behind the Losses at the Japanese Bank, Financial Times (London), Sept. 30, 1995, at 7; John Gapper & Nicholas Denton, Leeson's Bid to be a Star Led to Bank's Crash: Trader 'Subsidised' Sale of Derivatives, Financial Times (London), Sept. 18, 1996, at 1; John Gapper & Christopher Parkes, Top Banks Allege Big Frauds by Employees: Credit Lyonnais and Deutsche Bank Lose Millions, Financial Times (London), Apr. 8, 1995, at 1; Rob Garver, Operational Lapses Cost the Industry $7 Billion, American Banker, Nov. 18, 1999, at 1; Brian M. Sullivan, Blame Lax Management, Not Derivatives, American Banker, Mar. 31, 1995, at 18.
7. See Garver, supra note 2.
8. See Kevin Dietrich, Small Banks Develop Taste for Some Derivatives Deals, American Banker, May 29, 1996, at 8 (noting the "numerous lawsuits brought against derivative trading firms such as Bankers Trust"); Jim Kelly, Barings Auditors Sued for £460M, Financial Times (London), June 8, 1996, at 5; Joseph Radigan, Playing Catch-up on Risk Control, U.S. Banker, July 1996, at 32 (discussing the "flurry of lawsuits" that resulted from the failures of Kidder Peabody and Barings PLC and the trading losses by Daiwa Bank's New York branch).
9. See Kevin Dietrich, Small Banks Develop Taste for Some Derivatives Deals, American Banker, May 29, 1996, at 8 (noting the "numerous lawsuits brought against derivative trading firms such as Bankers Trust"); Jim Kelly, Barings Auditors Sued for £460M, Financial Times (London), June 8, 1996, at 5; Joseph Radigan, Playing Catch-up on Risk Control, U.S. Banker, July 1996, at 32 (discussing the "flurry of lawsuits" that resulted from the failures of Kidder Peabody and Barings PLC and the trading losses by Daiwa Bank's New York branch).
10. See Kevin Dietrich, Small Banks Develop Taste for Some Derivatives Deals, American Banker, May 29, 1996, at 8 (noting the "numerous lawsuits brought against derivative trading firms such as Bankers Trust"); Jim Kelly, Barings Auditors Sued for £460M, Financial Times (London), June 8, 1996, at 5; Joseph Radigan, Playing Catch-up on Risk Control, U.S. Banker, July 1996, at 32 (discussing the "flurry of lawsuits" that resulted from the failures of Kidder Peabody and Barings PLC and the trading losses by Daiwa Bank's New York branch).
11. See generally Robert C. Cox & Jeffrey S. Grange, Risk Management Issues and the Rouge Trader, Bank Director's 1999 White Paper on Risk Management (1999) (listing common risk factors to trading losses).
12. See Securities Exchange Act of 1934, 15 U.S.C. § 78a (1994); Securities Act of 1933, 15 U.S.C. § 77a (1994); 17 C.F.R. § 229.301-303 (1999).
13. See Accounting for Derivative Instruments and Hedging Activities, Statement of Financial Accounting Standards No. 133, §§ 44-47 (Financial Accounting Standards Bd. 1999).
14. See 15 U.S.C. § 78m; 17 C.F.R. §§ 240.13a-1, 240.13a-13.
15. See 15 U.S.C. § 77z-2 (Supp. IV 1998).
16. See Accounting for Derivative Instruments and Hedging Activities, Statement of Financial Accounting Standards No. 133, supra note 7.
17. See id. §§ 1,3.
18. See id. §§ 3, 220.
19. See id.
20. See id. §§ 3, 217-19.
21. See id. §§ 3, 220-23.
22. See id. §§ 3, 229.
23. See id. §§ 3,230.
24. See id. §§ 3,220-23.
25. See Levin, supra note 1, at 20-21.
26. See Risk and Derivatives Consulting Board, Inc., Market Volatility and the Rogue Trader: A Handbook for Directors, Officers, and Risk Managers 14 (2000) [hereinafter Handbook].
27. See id.
28. See id.
29. See id.
30. See Levin, supra note 1, at 27.
31. See Handbook, supra note 20, at 17-18.
32. See id. at 20.
33. See id. at 21.
34. See id.
35. See id. at 23.
36. See id.
37. See id. at 25.
38. See id. at 26.
39. See id. at 26-27.
40. See Cox & Grange, supra note 5.
41. See id.; Gapper & Denton, supra note 2; Kelly, supra note 4.
42. See Cox & Grange, supra note 5.
43. See Handbook, supra note 20, at 27.
44. See id.
45. See id. at 28.
46. See id at 32.
47. 4L See Brane v. Roth, 590 N.E.2d 587, 591-92 (Ind. Ct. App. 1992) (stating that "the business judgment rule protects directors from liability only if their decisions were informed ones"); Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984) (finding no liability when "in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company").
48. See Brane, 590 N.E.2d at 591-92.
49. See Aronson, 473 A.2d at 812.
50. See Handbook, supra note 20, at 34.
51. See Dietrich, supra note 4; Radigan, supra note 4.
52. See Cox & Grange, supra note 5.
53. See Handbook, supra note 20, at 39.
54. See id. at 40.
55. See Securities Exchange Act of 1934, 15 U.S.C. §78a (1994); Securities Act of 1933, 15 U.S.C. § 77a (1994); 17 C.F.R. § 240.10b-5 (1999).
56. See supra note 3 and accompanying text.
57. See Handbook, supra note 20, at 40.
58. See Cox & Grange, supra note 5.
59. See Baker & Urry, supra note 2; Gapper & Denton, supra note 2; Kelly, supra note 4.
60. See Cox & Grange, supra note 5.
61. See id.
62. See Handbook, supra note 20, at 41.
63. See id. at 42.