Special thanks to the
2014 TMA Partners for
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of TMA programs.
Q How did you end up doing turnaround and restructuring work?
My first brush with
restructuring and bankruptcy was
actually when I was 10 years old. Barings
Bank was an English bank that went
bankrupt at the end of February 1995.
That was my family’s bank. I was born
and raised in the States. I have dual
citizenship with England, but I’m very
much the only American in the family.
Barings had been around since
1762, a really defining aspect of the
Baring family. The failure of Barings
did have quite large implications on
our family, our personal lives, etc. I
remember getting calls at our house
in New York asking if my father was
home and was going to come and
save the bank or if I was going to.
That was really my first brush with
the concept of failing business and,
in particular, a legacy business.
It seems maybe a bit ironic that I ended
up in restructuring and turnaround
work. We work predominately at
Scouler & Company with middle
market businesses. In the middle
market there are tons of family
businesses that are currently, as
baby boomers transition out of the
workforce, facing issues of transition
and legacy planning for the business.
I’ve been able to work on a couple of
engagements that are family-owned
businesses. Certainly, I find myself very
involved and interested in figuring
out how these family businesses can
make it or, in certain cases, how we can
minimize exposure to the downside
of a business gone bankrupt.
Q Can you explain the difference between what the trader who
caused Barings' downfall was presenting
as a low-risk strategy versus what he
It had to do with derivatives
trading. Senior management didn’t
necessarily have a firm grasp on what
exactly the trader, Nick Leeson, was
doing. At one point in the early 1990s, his
trading alone accounted for 10 percent of
Barings’ revenue. Everyone was very
pleased that he was able to get such
His trading strategy was basically
arbitraging futures contracts between
the Nikkei 225, Osaka Exchange, and
the SIMEX (Singapore International
Monetary Exchange), basically long
and short currency contracts on those
markets. Also, he was very familiar
with the back office controls, having
come up through Barings from doing
back office administrative work, to
becoming a trader. That allowed him
to cover up a lot of his losses in an
error account. Often, it was due to
fraud. At times there were enormous
losses—in the hundreds of millions
of pounds—and he reported profits.
While management should have been
more circumspect at having such great
returns on what was intended to be
a pretty low-risk trading strategy, the
money was so good that nobody really
asked any questions until it was too late.
When an earthquake hit Kobe, Japan,
all of those positions he had taken were
called, and there was simply not enough
money to cover those calls. No one
could have foreseen the earthquake.
But because of that, the stock markets
dropped dramatically, and Nick Leeson
was way overexposed—to the tune of
800 million GBP, which is roughly a little
more than $1 billion U.S. dollars. That was
more than Barings could sustain—more
than the total assets of the whole bank—
so in very dramatic fashion, on February
25, 1995, they were bankrupt and by the
first or second week of March, they were
sold to ING, a Dutch bank, for 1 pound.
Q Did Leeson face criminal charges?
Yes, he did. He was in
prison for a while. He had cancer and
was released on humanitarian terms.
There was a UBS trader—I’m not exactly
familiar with the details—who lost
roughly a billion pounds. Nick Leeson, of
course, was one of the first pundits they
called to talk on television about his
He wrote a book called Rogue Trader,
and they made a movie of the same
name about his experience. He seems to
be none the worse for wear. It’s kind of
bizarre that something that had such a
catastrophic impact on a centuries-old
business actually served to be his claim
to fame, and he trades on that now.
If there’s one thing I’ve learned in my life,
there are a lot of things that can bring
you down, but everything in life is about
perspective. That whole experience has
done nothing more than motivate me to
be the best version of myself that I can