"IRRATIONAL EXUBERANCE!!!"
Posted on 09/29/2012 9:34:25 AM PDT by Toddsterpatriot
While most people would agree with the sage advice not to drink and drive, the same could generally be said for mixing drinking with just about any activity. Former senior broker at PVM Oil Futures Steve Perkins learned this the hard way.
The broker managed to spend $520 million of company funds on oil futures the night of June 29, 2009, despite having no authority to do so. The following morning, when asked about the expenditure by an admin clerk, Perkins had no recollection of the purchase.
A recently released report by the Financial Services Authority (FSA) concluded the trades were made in a “drunken blackout.”
Perkins ultimately purchased 69 percent of the global market between the hours of 1:22 a.m. and 3:41 a.m. causing the price of oil to jump $1.50 per barrel, “the kind of swing that is caused by a major geopolitical event,” CNBC notes.
The global barrel price went from $71.40 to $73.05, as Perkins bid higher and higher each time.
Upon sobering up and presumably realizing what he had done, Perkins messaged his boss that he would not be able to make it to work due to an unwell relative.
PVM Oil Futures lost nearly $10 million when the company eventually realized the trades had not been made on the account of a client.
Perkins had his trading license revoked for five years and was served with a fine of $116,878 after an official investigation and admitting to having a drinking problem.
“The FSA has said that they will re-approve his license after the five-year period, if he has recovered from his drinking problem, although they warned that, ‘Mr. Perkins poses an extreme risk to the market when drunk,’” CNBC reported.
Drunk trading ping!
Not to worry, that's why we have representatives in Washington DC, to do the drunk spending we won't do.
/johnny
How did his company end up losing $10 million?
Oil basically went straight to $85/barrel over the next 4 months.
If he didn’t have authorization, why did the company software allow this to happen? This trader isn’t the only idiot at the company.
I believe there was price manipulation. I’m not sure I believe the story off the drunken trader. There have been too many “rogue” trading incidents for any rational company not to have somebody assigned to check.
No kidding.
You mean beyond some idiot buying 7000 futures contracts when trading volume is very thin? Please explain your theory further.
"IRRATIONAL EXUBERANCE!!!"
I agree. MF Global's misadventures started not with their implosion, but a "rouge trader" who lost a lot of money in wheat futures, about a year prior to their implosion.
You can believe one of two things. Either they are not authorized to do these things and do them anyway, with no internal corporate control systems to stop them from moving around massive amounts of money, or they are doing exactly what they are supposed to be doing , and being blamed when things go bad.
We're sailing on the wide accountancy!
Spending like drunken sailors.
Then signs up on Freerepublic as Soloman8522.
So, why didn’t the company make money then? Something isn’t right here.
Objection from a retired sailor: I object and take exception to everyone saying President Barack Obama and Congress are spending money like a drunken sailor. As a former drunken sailor, I quit spending when I ran out of money.
GUS LINT
U.S. Navy (retired)
Merced
http://www.mercedsunstar.com/2012/08/30/2507859/gus-lint-how-drunk-sailors-spend.html
Well said shipmate. When I ran out of money it was out on the street for me... Lol.
Exactly where our free spending politicians need to be at the end of next January.
Just to clairfy: I’m quoting the letter, I’m not the author. I agree with the sentiment expressed 100%, though.
Their bar bill
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