Liquor and trading is a deadly combination as was seen in Britain, five years back. The British financial regulator, the Financial Services Authority (FSA) had on the 29th June 2010, punished a broker of PVM Oil Futures, Stephen Noel Perkins with a fine of 72,000 pounds and a five year ban. Perkins had bought over 7 million barrels of Brent crude oil, under a drunken trading spree. Skipping work after the weekend, and still under heavy intoxication, he traded in the wee hours of the next day. Drunken Perkins set fire to oil, driving the global oil prices to an eight month high.
When he was confronted by his office the next morning, as to why he had bought 7 million barrels of crude late in the night, Perkins claimed innocence, stating that he spent the night trading with a client. He however refused to put the client in touch with the office. The price of oil meanwhile rose by over $1.50 per barrel in less than 30 minutes at around 2 am. Perkins trading had also pushed Brent crude prices to $73.50 a barrel, the highest prices for 2009 on the InterContinental Exchange. It was later learnt that his trading spree started with a genuine order on behalf of a client identified as ‘Client A’, followed by seven more orders totaling $8 million, paid by PVM’s cash.
Before PVM could take stock of the position and react, the company had accumulated losses of $9,763,252. The company had eventually ended the year with a loss of $7.6 million on revenues of $12 million. Perkins later confessed and cooperated with the inquiry. He said he could hardly recollect the events and that the trades were done via his laptop when he was high on alcohol. The company was quick to sack him. The company noted that Perkins was only allowed to trade on behalf of his clients and not for the company.
Perkins admitted to having alcohol problems and has received treatment for the same. FSA noted that the fine had actually been reduced from 150,000 pounds due to potential financial hardships. The FSA also noted that Perkins was not a ‘fit and proper person’ and that he ‘poses an extreme risk to the market when drunk’. Despite this ban in the UK, Perkins seems to have got a new assignment in Switzerland. He is in talks with Geneva based commodity broker Starsupply Renewables SA. The FSA has revealed that it had notified Swiss regulators but that it cannot stop Perkins from trading beyond the UK. Perkins new offer only highlights the value of these top trade brokers.
