Calyon’s Golden Child Lays an Egg

Aggressive traders occasionally double-down on big bets in an attempt to get out of a bad situation. When it does not work, they are often labeled as rogue traders, which does not look good on a resume.

Is Richard Bierbaum a chip off of Nick Leeson’s old block? Few 26-year old traders have an opportunity to lose millions of dollars, much less than $353 million that the Calyon trader dropped this summer.

The Calyon trader fired last month for alleged unauthorized trading that led to 250 million euros ($353 million) of losses said his bosses knew what he was doing and considered him a ``golden child’’ of the New York office.

``There was nothing deceptive or rogue,’’ Richard ``Chip’’ Bierbaum, 26, said in an interview. ``My positions were reported on a daily basis. It did not blow up. I expect there were some losses but nowhere near the amounts they are discussing. I was the golden child of credit trading in New York.’’ Bloomberg

Bierbaum’s folly has taken its toll on many of his superiors, who have been dropping harder than Chip’s P&L. The credit default swaps he traded moved mysteriously on the day his trade was discovered, and Bierbaum claims the banks ineptitude turned a $100 million winner into a $353 million loser. For now it seems to be a case of he said, she said. And the lawyers are squaring off. But John Coffee’s sentiments pretty much sum it up:

``You would think that a bank would put limits on the aggregate amount a 26-year-old could have to trade’’

The European bank might not operate in Denmark, but something is definitely rotten here. Did the bank panic and close out his trade at an inopportune time? Crazy markets lead to bad decisions, and perhaps Bierbaum will be vindicated in the end.

Calyon Trader Fired for Losses Says He’s No Rogue
Bloomberg

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