The Barings collapse 25 years on: What the industry learned after one man broke a bank

Exactly 25 years ago, Britain's oldest investment bank, which listed Queen Elizabeth II among its clients, was declared insolvent.

Nick Leeson, the bank's then 28-year-old head of derivatives in Singapore, gambled more than $1 billion in unhedged, unauthorized speculative trades, an amount which dwarfed the venerable merchant bank's cash reserves.

Through manipulating internal accounting systems, Leeson was able to misrepresent his losses and falsify trading records. ACA Compliance Chief Services Officer Carlo di Florio, a former senior executive at both FINRA and the U.S. Securities and Exchange Commission , said this convergence of duties was tantamount having "the fox guarding the hen house."

"Today, if you had a Nick Leeson on a trading desk, there would be trade surveillance systems with a whole bunch of triggers continuously looking at what kind of activity he is engaged in, and red flagging anything that seems potentially violative of internal policies or regulatory requirements" di Florio explained.

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