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(CNBC)   How one alcoholic broker managed to gain control of 69% of the global oil market and spike the price, in just few late night hours of trading while drunk   (cnbc.com) divider line 52
    More: Scary, Financial Services Authority, electronic components  
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6295 clicks; posted to Business » on 28 Sep 2012 at 1:03 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-09-28 10:53:53 AM  
Most guys just drunk text their ex. Here's to you Drunk Broker Guy for going above and beyond the call of duty.
 
2012-09-28 11:10:55 AM  
Just don't criticize him or his type will go all John Galt on us.
 
2012-09-28 11:11:34 AM  
If the guy had made their company 20 million dollars, he would be a trading legend at the water cooler and have gotten some 2 million dollar bonus. There would be rumors like "Dude that guy spiked the oil market at 2am on a drinking binge and pulled in 7 figures for that shiat."

Since he lost money on his bet - OMGZ ROGUE TRADER!!

And once again a complete lack of corporate accountability.
 
2012-09-28 12:09:14 PM  
scienceblogs.com
 
2012-09-28 12:30:25 PM  
Hey, we've all been there. It's only an issue of access and scale in this case.
 
2012-09-28 01:06:53 PM  
Free Markets!!!

/burp
 
2012-09-28 01:07:45 PM  
Just imagine what thousands sociopaths drunk on greed can do!

Oh wait, we don't have to imagine.
 
2012-09-28 01:12:05 PM  
I have a bridge to sell...
 
2012-09-28 01:18:24 PM  
Old video of Romney praising him hits Politico in 3, 2...
 
2012-09-28 01:19:09 PM  
Roughly a hundred thousand dollar fine and a 5 year suspension for farking up the world commodities markets and nearly triggering a global economic collapse? Sounds perfectly reasonable
 
2012-09-28 01:26:22 PM  
But what was he drinking? That's the important thing.
 
2012-09-28 01:33:03 PM  
Only $520 million bought 69% of the global oil futures market?
 
2012-09-28 01:39:01 PM  
Damn. Drunk trading.
 
2012-09-28 01:44:20 PM  

Lost Thought 00: Roughly a hundred thousand dollar fine and a 5 year suspension for farking up the world commodities markets and nearly triggering a global economic collapse? Sounds perfectly reasonable


"nearly triggering a global economic collapse"? Where the hell do you get that from. He drove the price from 71.50 to 73.
 
2012-09-28 01:45:33 PM  

BarkingUnicorn: Only $520 million bought 69% of the global oil futures market?


i'm guessing its 69% of the oil futures market during those 2 1/2 hours.

this company is based in London; by the time he started trading US markets were closed.
 
2012-09-28 01:52:44 PM  
Was he butt-chugging?
 
2012-09-28 01:54:08 PM  
THIS is why we should have a .5 cent tax on speculators.
 
2012-09-28 02:04:40 PM  

SlothB77: [scienceblogs.com image 400x215]


Yep. I've written some of my best code while under the influence.
 
2012-09-28 02:05:10 PM  
This is why you don't play Oil Tycoon if you're really in the oil industry. Same goes for rollercoaster tycoon. The last thing we need is for some drunk ass to wake up and say, "Oh man, I killed so many kids on botched rides on the game last night!" Only to get a phone call to find out it wasn't a game.

/going back to feeding kids to the tigers in Zoo Tycoon
 
2012-09-28 02:08:58 PM  
$72 a barrel. cheap. Smart move if he could have held on to it all a bit longer.
 
2012-09-28 02:10:04 PM  

SlothB77: [scienceblogs.com image 400x215]


That's the same graph I use when describing my pool shooting ability.
 
2012-09-28 02:12:59 PM  

Heraclitus: THIS is why we should have a .5 cent tax on speculators.


No, it isn't. Not at all.
 
2012-09-28 02:17:31 PM  

Hydra: Heraclitus: THIS is why we should have a .5 cent tax on speculators.

No, it isn't. Not at all.


You two sound like characters in an ancient Greek epic.
 
2012-09-28 02:29:06 PM  
that's just what they want us to believe, man.
 
2012-09-28 02:47:07 PM  

dumbobruni: BarkingUnicorn: Only $520 million bought 69% of the global oil futures market?

i'm guessing its 69% of the oil futures market during those 2 1/2 hours.

this company is based in London; by the time he started trading US markets were closed.


There's also the possibility that he had access to a bit of leverage.
 
2012-09-28 02:53:12 PM  
So this guy tanks 10 million dollars and farks with a critical world asset, and all he gets a 116k fine???? And he can get his licence back later???

Some kid with a half a baggie of weed gets three years and a ruined life.


Yeah, the justice system is just perfect. No bias to upper class white males at all. nope.
 
2012-09-28 03:10:51 PM  

dognose4: $72 a barrel. cheap. Smart move if he could have held on to it all a bit longer.


He could have, but he'd have to find a lot of free space to store it all. I don't know how long you can keep a receipt for a contract delivery but I would assume after awhile whoever has your order stored away in their warehouse would get a little pissy at you for not picking it up.
 
2012-09-28 03:14:43 PM  

highendmighty: Hydra: Heraclitus: THIS is why we should have a .5 cent tax on speculators.

No, it isn't. Not at all.

You two sound like characters in an ancient Greek epic.


αλλά είμαστε
 
2012-09-28 03:35:36 PM  

ThePastafarian: dumbobruni: BarkingUnicorn: Only $520 million bought 69% of the global oil futures market?

i'm guessing its 69% of the oil futures market during those 2 1/2 hours.

this company is based in London; by the time he started trading US markets were closed.

There's also the possibility that he had access to a bit of leverage.


the quoted figure is with leverage.

when you buy a futures contract, you only put 15% (at most) in cash upfront.

if he leveraged up $520 million, the losses would have been much, much greater than $10 million.
 
2012-09-28 04:00:15 PM  
This is the best business tab article I've ever read. Hilarious.
 
2012-09-28 04:37:52 PM  
Obviously, we need less regulations on Wall Street to prevent this from happening again.
 
2012-09-28 04:45:28 PM  

Vegan Meat Popsicle: dognose4: $72 a barrel. cheap. Smart move if he could have held on to it all a bit longer.

He could have, but he'd have to find a lot of free space to store it all. I don't know how long you can keep a receipt for a contract delivery but I would assume after awhile whoever has your order stored away in their warehouse would get a little pissy at you for not picking it up.


They were oil futures. The didn't say when delivery was, but they sell futures up to 3 years out.
 
2012-09-28 04:52:38 PM  

LemSkroob: So this guy tanks 10 million dollars and farks with a critical world asset, and all he gets a 116k fine???? And he can get his licence back later???

Some kid with a half a baggie of weed gets three years and a ruined life.


Yeah, the justice system is just perfect. No bias to upper class white males at all. nope.


Uh, it's money. Money is what gets them immunity from the laws the rest of us live with Not skin color.

Why'd you immediately assume skin color? That's incredibly racist.
 
2012-09-28 05:36:39 PM  

Satanic_Hamster: Obviously, we need less regulations on Wall Street to prevent this from happening again.


What regulation would have prevented this? A strict "no trading while blacked out" ordinance? How about breathylizer locks on all bloomberg terminals?
 
2012-09-28 06:51:54 PM  
The FSA has said that they will re-approve his license after the five-year period, if he has recovered from his drinking problem, although they warned that,"Mr Perkins poses an extreme risk to the market when drunk."

So he basically caused the loss of millions of people's hard earned money and the FSA is going to give his licese back, and then they make a joke about it? WTF is wrong with world.

Debeo Summa Credo: Satanic_Hamster: Obviously, we need less regulations on Wall Street to prevent this from happening again.

What regulation would have prevented this? A strict "no trading while blacked out" ordinance? How about breathylizer locks on all bloomberg terminals?


Or how about not letting one person make $520 million dollars worth of purchases without multiple people approving it? At the very least.
 
2012-09-28 07:58:29 PM  

ThePastafarian: dumbobruni: BarkingUnicorn: Only $520 million bought 69% of the global oil futures market?

i'm guessing its 69% of the oil futures market during those 2 1/2 hours.

this company is based in London; by the time he started trading US markets were closed.

There's also the possibility that he had access to a bit of leverage.


i.cnn.net

Hmmmm......
 
2012-09-28 10:17:32 PM  
Wooooohoooo for booze!

\i love brandy
 
2012-09-28 11:41:27 PM  

Debeo Summa Credo: Lost Thought 00: Roughly a hundred thousand dollar fine and a 5 year suspension for farking up the world commodities markets and nearly triggering a global economic collapse? Sounds perfectly reasonable

"nearly triggering a global economic collapse"? Where the hell do you get that from. He drove the price from 71.50 to 73.


Here's the funny part... remember in 07 right before the economy tanked when gas prices spiked up to over 130 a barrel? Prices at the pump are still the same now as they were then, at least in my neck of the woods.

/yadda yadda, price of LSC only marginally related to the price at the pump
 
2012-09-29 02:48:35 AM  
i44.tinypic.com
 
2012-09-29 02:57:25 AM  
Shoot the stupid fark

Mentat: Most guys just drunk text their ex. Here's to you Drunk Broker Guy for going above and beyond the call of duty.


heheheh...you said "duty"
 
2012-09-29 04:53:29 AM  
Where is our resident Paul Krugman fellater? I want him to explain to us again how speculation on oil doesn't affect its price. You still awake viagramule?
 
2012-09-29 05:31:30 AM  
24 hours from bottle to throttle.
Before trading? Six, or you'll hit the bricks.
 
2012-09-29 09:48:42 AM  
INVISIBLE HAND
 
2012-09-29 11:40:38 AM  

Eatin' Queer Fetuses for Jesus: Where is our resident Paul Krugman fellater? I want him to explain to us again how speculation on oil doesn't affect its price. You still awake viagramule?


Err, if speculation on oil affects its price, why did the company lose millions? He dumped $0.5b on the market by bidding the price up for a couple of hours. When they sold off the futures they lost money on them as the price went back down to around the original price. So unless there is some organization that has billions upon billions of dollars to spend every day bidding up the price, and then leaving that money in the market permanently knowing that when they eventually unwind the price hike they will have lost money doing it, then speculation doesn't affect the price. And dumping a huge amount of money into buying up futures knowing you are going to lose money on is not "speculation" anyway.
 
2012-09-29 11:56:07 AM  

meteorite: Wooooohoooo for booze!

\i love brandy



Hmm, let's check the ol' profile --

Location: Louisville, KY

Okay, that was unexpected. Brandy's historically been a Wisconsin thing.
 
2012-09-29 12:21:41 PM  

xria: Eatin' Queer Fetuses for Jesus: Where is our resident Paul Krugman fellater? I want him to explain to us again how speculation on oil doesn't affect its price. You still awake viagramule?

Err, if speculation on oil affects its price, why did the company lose millions? He dumped $0.5b on the market by bidding the price up for a couple of hours. When they sold off the futures they lost money on them as the price went back down to around the original price. So unless there is some organization that has billions upon billions of dollars to spend every day bidding up the price, and then leaving that money in the market permanently knowing that when they eventually unwind the price hike they will have lost money doing it, then speculation doesn't affect the price. And dumping a huge amount of money into buying up futures knowing you are going to lose money on is not "speculation" anyway.


Are you an idiot, or do you just play one on the internet?
 
2012-09-29 12:38:33 PM  

phaseolus: meteorite: Wooooohoooo for booze!

\i love brandy


Hmm, let's check the ol' profile --

Location: Louisville, KY

Okay, that was unexpected. Brandy's historically been a Wisconsin thing.


Hey, it's not always bourbon here.
 
2012-09-29 04:58:42 PM  
What's his Fark handle?
 
2012-09-30 01:04:44 AM  

Debeo Summa Credo: Satanic_Hamster: Obviously, we need less regulations on Wall Street to prevent this from happening again.

What regulation would have prevented this? A strict "no trading while blacked out" ordinance? How about breathylizer locks on all bloomberg terminals?


I dunno, having controls so that one person can't spend hundreds of millions without another person signing off on it? This isn't the first case (or even largest case) of a rogue trader spending even billions without anyone noticing.
 
2012-09-30 03:35:00 AM  
It's a catch-22. Making millions off a trade of a hundred million or so is what they're paid for. Most markets move around 1% in the average day. Do that over and over again, bat over .500, and you win. (More realistically, do it over and over again, keep your losses to 0.5%, and let your winners ride to 1.0%, and you only need to bat .333 to win.)

The time required to have a superior sign off on every trade would be prohibitive. Breathalyzer locks are a nice idea in principle, but even though the era of the three-martini lunch is mostly over, the fact remains that more intelligence is gathered over lunch/dinner than most would like to admit. That notwithstanding, these guys don't exactly sleep. When some dude on the proverbial graveyard shift punches in an extra "0" (or ",000"), nine times out of ten he can probably back his way out of the trade before anything goes terribly wrong. If it actually moves the markets, half the time it works out in the trader's favor, and the other half the time it doesn't, but the damage is minimal and it gets chalked up as a losing trade. What happened here, where the markets moved against the trader while the trader was unwilling/unable to back out of it, is like the case where the coin landed on its edge. Toss a million coins a day, something like this is guaranteed to happen every few months.

The system's more than robust enough to handle the occasional drunken fatfingering of the order button. To demonstrate just how robust, it ate up Knight Capital's bucket of fail 2 months ago with barely a hiccup, which was kind of a pleasant surprise given how hard it failed during the flash crash of 2010. The only victim of that particular hour of stupidity was KCG.

Don't worry about the drunks trading thin/illiquid markets after-hours. Worry about the robots that are supposed to provide liquidity up until the nanosecond that they all decide to stop providing liqudity. And even then, don't worry too much. It's a casino, but in a poker room, the house doesn't really care who wins, as long as it takes the rake.
 
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