Top 10 Worst Trading Losses in History

Worst Trading Losses in History worldwide.

The trading industry is probably among the most advertised on the web. You have probably seen pictures with links containing the following messages: “Billionaires do not want you to read this”, or stuff like, “Bill gates wants this article banned”, as if he really cared. But the harsh truth dear friends, is that 90 percent of traders never succeed in this money exchange business. Here is a top 10 list of those among them who performed the worst trading losses in history, losing terrific amounts of money, becoming regrettably famous.

Worst Trading Losses: Metalgellschaft – 1993 – 1.3B.

In 1993, German metal giant Metallgellschaft encountered a major loss when attempting to speculate on oil prices increase. This astonishing loss occurred while Heinz Schimmelbusch was the CEO of the company. Prices dropped instead, causing a loss of $1.3B, resulting in the resignation of the CEO. The company almost went bankrupt.

Worst Trading Losses: Orange County – 1994 – 1.7B.

In 1994, Robert Citron, a treasure tax collector from orange county became famous after a critical trade that cost the county $1.7B. At the time of the events, he was managing funds worth $8B. The failure to predict the rise of interest rates, not to mention the panic associated to it is believed to be behind his misfortune.

 

Worst Trading Losses: JP Morgan Chase – 2012 – 2B.

On May 10th 2012, the JP Morgan Chase bank disclosed a trading loss of $2B in connection with derivatives trades. Bruno Iksil, also known as the “London Whale” was believed to be the man behind this historic financial loss in London, but further investigations point to several errors of judgement from management, especially from the office of the chief investment officer. It is not clear if criminal

Worst Trading Losses: UBS – 2011 – 2B.

September 2011, U B S, the Swiss biggest bank just lost $2B, after a series of unauthorized trades made by London based trader, Kweku Abodoli, went south. The irony of this loss lies in the fact that the computer system of the investment program warned his managers about the trades, without any significant actions taken against the trader. This discovery led to the resignation of the CEO along with other business managers. Convicted of financial fraud, the unfortunate trader served nearly 4 years in prison. But the question I am asking myself is, how is it that you can trade so much money without your manager’s approval? What if he made the money ($2B) who would have benefited from it? Please answer in the comment section.

Worst Trading Losses: Aracruz – 2008 – 2.5B.

Aracruz is believed to be among the top eucalyptus pulp producers in the world. In late 2008, the Brazilian giant decided to bet on an increase of the Brazilian Réal against the US dollar, which occurred for the past 4 years. But this year would be different, as the réal would fall, fall more, and more, losing in just 8 weeks 24 percent of its value. This resulted in a catastrophic loss of $2.5B.

Worst Trading Losses: Sumitomo Corp – 1995 – 2.6B.

Japanese Metal giant, Sumitomo Corp faced a critical loss in 1995, as their top copper trader, Yasuo Hamanaka, lost colossal amounts of money through bad trades. For nearly a decade, this man managed to cover up his losses by getting involved in unauthorized trading, forging his bosses’ signatures. It was discovered that he lost a total of $2.6B. He admitted that he was acting alone and was sentenced to 8 years imprisonment.

Worst Trading Losses: Long Term Capital Management – 1998 – 4.6B.

Founded in 1994 by John Meriwether, Long Term Capital Management went through a tough season during the Russian economic crisis in 1998. As a result of this crisis, the firm lost an astonishing amount of $4.6B within just 4 months. This turn of events caused panic among investors who pulled their money out, leaving Meriwether’s firm in debt. Fearing that these events would lead to a catastrophic financial meltdown in Wall Street, several banks offered to bail out the firm, which would be later on liquidated.

Worst Trading Losses: Aramanth Advisors – 2005 – 9B.

Here is a good example of traders who do not know when to quit the market and enjoy their gains. Aramanth Advisors enjoyed success in 2005, after making $1B thanks to the rise of energy prices, owning assets worth $9B. Thinking that success is a loyal friend when it comes to trading, they embarked on other trades in natural gas futures, thus losing $6B. As a result of this crazy loss, the hedge fund collapsed. You just need to learn when to quit, before you lose everything!

Worst Trading Losses: Societe Generale – 2008 – 7.2B.

January 2008, 31 years old Jérome Kerviel, a French national working for Société Generale got involved in unauthorized trades, losing the incredible amount of $7.2B. Although he was charged with breach of trust, serving 3 years in prison, it is believed that his superiors were aware of his activities, yet did not do anything about it. His friends even claimed that he was used as a scapegoat in this matter. He was fined with refunding the full amount lost by the bank, well, good luck trying to raise $7.2B with no financial institution willing to recruit you!

 

Worst Trading Losses: Morgan Stanley – 2007 – 9B.

Howard Hubler, a mortgage trader at Morgan Stanley in 2007, gambled on better mortgage, which turned out to be worthless. The bill was heavy, the worst series of trades ever made by a human being, a colossal loss of $9B. Surprisingly enough, he is among the few losers on this list who did not go to prison. Even more, he was offered a $10M package to leave Morgan Stanley by September 2007. Following the economic collapse of 2008, the bank lost a total of $58B.

 

 

 

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