John Rusnak said that he had also been a “somebody”. He was referring to the period when he was in prison. But before going to prison, he had already been well – known in the financial market as a “Rogue Trader”.
In 1993, Allied Irish Banks (AIB) employed John Rusnak as a foreign exchange trader at its American branch Allfirst Financial. In 1996, Rusnak started taking high – risk positions in the Japanese yen. In 1997, he lost $29.1 million, and by 2001, this figure had grown to $300 million. He concealed these losses and created the illusion that the bank was still profitable. As a result, he received more than $433,000 in rewards.
This quickly became a scandal in the global financial industry, comparable to the case in 1995 when Nick Leeson brought down Barings Bank. Due to the huge losses, AIB Bank soon sold Allfirst to M&T Bank in New York.
The court charged John Rusnak with seven criminal acts including fraud and forging bank records. The court sentenced him to seven and a half years in prison. Eventually, due to his good behavior in prison, he only served six years and completed his sentence and got released from prison in 2008.
Rogue traders are notorious for the huge losses caused by their illegal transactions and the serious impacts on the financial institutions or investors where they work. InvestFancy has reported many stories about rogue traders, and John Rusnak is one of them.
However, many story reports end when the rogue traders get sentenced to prison, and few people continue to pay attention to their situation after they get released from prison. After they plead guilty and serve their sentences, it is very difficult for these traders to attract the attention of the news media again. Some conduct trading training based on their own experiences after being released from prison, warning traders to stay away from wrong mindsets. Some, like John Rusnak, return to an ordinary life.
Compared with the high – spirited appearance on the newspaper headlines in those days, John Rusnak is now in his fifties and his demeanor has become more peaceful. Now he manages several dry cleaning stores and sometimes makes self – deprecating remarks like “I used to ‘launder money’ and now I wash clothes.”
John Rusnak said that he has to atone for his past, so he pays the fines imposed by the court every month. He estimates that he will have to work until he is 70 years old to repay all reasonable expenses.
Someone once invited him to participate in a paid public speech together with another rogue trader Nick Leeson, but he refused, saying that he is currently devoting all his energy to operating the dry cleaning store.
“I constantly emphasize to my employees the importance of honesty. I tell them that they must communicate in a timely manner when problems arise because bad things will not get better with time. In my store, making a mistake will not lead to dismissal, but hiding a mistake will. I’m quite sensitive about this point.”
Nearly 20 years have passed and various changes have taken place in the financial market, including the global financial crisis that swept the world in 2008. Everything is moving forward. John Rusnak’s scandal is just one of the many in the history of finance. When evaluating the financial circle now, John Rusnak only said that regulatory agencies really should not get too close to bankers, as this will lead to the failure to fully implement regulatory functions. This should be the case in any industry.
Reproduction Notes：InvestFancy » Rogue Trader:John Rusnak