SocGen case rekindles memories of how Leeson downed Barings

By Saeed Azhar

SINGAPORE (Reuters) - It was deja vu for Singaporeans when French bank Societe Generale reported it had been defrauded of $7 billion by a rogue trader.

The stocks derivatives scam in France reminded Singaporeans of their biggest corporate scandal more than a decade ago when Nick Leeson's risky stock futures trades in the city-state brought British Barings bank to its knees.

SocGen accused the Paris-based trader of taking "massive fraudulent" positions on European equity market indices, leaving them nursing 4.9 billion euros of losses.

The losses dwarfed the $1.4 billion loss made by Leeson betting on Japan's Nikkei 225 Futures then traded on the defunct Singapore International Monetary Exchange (SIMEX).

There are many similarities in the two cases -- both dabbled in equity futures and both also knew how to skip the compliance and regulatory barriers.

The difference is that SocGen will live to fight another day while Barings was relegated to the history book of failed banks.

In Barings case, Leeson managed to circumvent the division between the back and front rooms, said K. Shanmugam, a local lawyer who represented SIMEX in the case against Leeson.

"His superiors couldn't understand what he was doing because the trades were too complicated for them."