It’s probably not uncommon for City traders to wonder how they burnt so much cash during a drunken night on the town.
But Steve Perkins was left with a bigger black hole in his memory than most when his employer rang one morning to ask what he’d done with $520m of the oil trading firm’s money.
It was 7.45am on June 30 last year when the senior, longstanding broker for PVM Oil Futures was contacted by an admin clerk querying why he’d bought 7m barrels of crude in the middle of the night.
The 34-year old broker at first claimed he had spent the night trading alongside a client. But the story began to fall apart when he refused to put the customer in touch with his desk for official approval of the trades.
By 10am it emerged that Mr Perkins had single-handedly moved the global price of oil to an eight-month high during a “drunken blackout”. Prices leapt by more than $1.50 a barrel in under half an hour at around 2am – the kind of sharp swing caused by events of geo-political significance. Ten times the usual volume of futures contracts changed hands in just one hour.
By the time PVM realised the trades were not authorised and swiftly began to unwind the positions, losses of exactly $9,763,252 had stacked up.
As a broker, Mr Perkins was only allowed to place trades on behalf of his clients – not using any of PVM’s own money. And records show that he placed a legitimate order for a client at 1.34pm through his broking desk by telephone. This was quickly followed by seven more orders with a value of $8m using PVM’s cash.
Mr Perkins’ trading stopped for a few hours, but in the early hours of the morning, he returned to the oil market via his laptop. He placed an incredible $520m in orders through ICE Futures Europe, where traders can buy or sell crude oil for future delivery and bet on whether prices will go up or down. The first trade was at 1.22am was at $71.40 per barrel and the last trade at 3.41am was at $73.05. During this period, Mr Perkins gradually edged up the price by bidding higher each time, until he was responsible for 69pc of the global market volume.
Having admitted to an alcohol problem and received treatment, Mr Perkins was banned from trading for five years and hit with a £72,000 fine, reduced from £150,000 because of potential financial hardship.
Mr Perkins was not available for comment last night at his £340,000 home in Brentwood, Essex, and it is not known whether he has found alternative employment. The FSA will consider re-approving him as a broker after the ban, if he has recovered from his alcohol problem, but noted “Mr Perkins poses an extreme risk to the market when drunk”. It added that there appeared to have been “no motive” for buying up the oil.
The investigation also shows that he was able to trade huge volumes with very little cash up front and no position limit, exposing how it easy it was for a single British broker on a bender to cause chaos in the oil market.-from the Telegraph
Category: Quotes
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I will hiss if I can’t bite
“.I can always hiss if can’t bite. If the people’s rights are endangered we will hiss. We can bow our heads to Ma, Mati, Manush, but not to the arrogance of power.When we are shouted, the louder will be our protest. We roar when intimidated. This is our pride.We may be poor, but we have dignity. People are the main assets of democracy. What Bengal thinks today, the world thinks tomorrow,” said Mamata Banerjee at a state government water project at Tallah Park in Kolkata.
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Ray Dalio on Gold
MODERATOR: Do you want gold?
DALIO: Oh, yeah. (Laughter.) I do. I think — well, I think anybody — let’s be clear that I think anybody who doesn’t have any — there’s no sensible reason not to have some — if you’re going to own a currency, if you don’t — it’s not sensible not to own gold. Now, it depends on the amount of gold, but if you don’t own, I don’t know, 10 percent in — if you don’t have that and then it depends on the world, then you — then there’s no sensible reason other than you don’t know history and you don’t know the economics of it. (Laughter.)
–from CFR.ORG
I had blogged earlier about how Kanda made a fortune in real estate.In an amazing article in BS,Dasarath Reddy exposes how Matrix’s Prasad set about making his killing in real estate in Andhra Pradesh.
It all started way back in 2008, when Andhra Pradesh government entered into a memorandum of understanding (MoU) with the emirate of Ras Al Khaimah. The MoU was for developing a port and an industrial corridor project called Vadarevu and Nizampatnam Port Industrial Corridor (Vanpic), respectively, involving two small ports on 4,000 acres each on a build, own, operate and transfer basis.
Prasad entered the picture when his company, Matrix Enport Private Limited, formally joined as RAK Investment Authority’s (RAKIA’s) India partner for the development of the project with the former holding 51 per cent equity in the special purpose vehicle (SPV), Vanpic Port Private Limited.
Following the approval of the proposal by the state cabinet headed by YS Rajasekhara Reddy, the infrastructure and investment department, the nodal agency for the project, signed a concession agreement with the SPV.
Deviations started with the concession agreement wherein Vanpic Port Private Limited was confined to the development of port while Vanpic Projects Private Limited, created by Prasad, was roped in as the developer of the industrial corridor on 24,000 acres, with absolute rights over the land.The government issued orders for acquisition of close to 12,000 acres, including the land earmarked for the ports in favour of Vanpic Projects. Subsequently, the company added three more SPVs — for ship-building, power venture and an airport project.
According to the CBI chargesheet, a copy of which is with Business Standard, Prasad changed the name of Matrix Enport Private Limited to Vanpic Projects Private Limited only to grab the land deceptively, as the name sounded similar to the original SPV.
The people in the government facilitated his plans, says the CBI: “The specific recommendation of the Empowered Committee headed by Chief Commissioner of Land Administration (CCLA) to alienate lands in favour of Vanpic Ports Private Limited was wilfully violated by the minister (D Prasada Rao) and the principal secretary (M Samuel). They facilitated wrongful alienation of lands in favour of Vanpic Projects Private Limited and thereby committed criminal breach of trust,” the chargesheet said.
The equity holding in the project then came into question. The CBI found that RAK had 51 per cent equity in just Vanpic Ports and Prakasham Airport Private Limited, also indirectly controlled by Prasad.
“According to business agreements with RAKIA, Prasad intended to secure 70 per cent equity by virtue of his participation in Rak Infra Holding limited, a Mauritius-based company, in which he had 42 per cent stake,” it said.
The government-to-government agreement was used as a mask to grab the project without any due bidding process, according to the CBI.
All the funds came into India on behalf of RAKIA, which received them from RAK Infra Holding and RAK Vision Limited, another Mauritius company. Prasad is the authorised signatory of the bank accounts of both the companies.
In 2010, Prasad started plans to sell the land. While the AP government alienated land at Rs 73,000 per acre, Prasad intended to sell the same at Rs 12.5 lakh per acre by entering into an agreement to transfer 700 acres to Coastal Sirohi Limited and 900 acres to SEW Thermal Power Corporation. He received advance from both the companies, according to the CBI.In 2011, Prasad engaged Jones Lang LaSalle Property Consultants, which valued the 12,973-acre land held by Vanpic Projects at Rs 1,426 crore, whereas they were actually bought at Rs 165 crore, the CBI said.
This is not all. Prasad had diverted the FDI, said to belong to RAKIA of Rs 428.72 crore in two spells for his personal use on the pretext of advance purchase of lands located at places like Visakhapatnam and Hyderabad, far away from the port project, amounting to criminal breach of trust. Of the Rs 278 crore taken as land aggregation advance in the first spell by Prasad’s companies, Rs 140 crore was invested in the companies of Jagan, the prime accused in the quid pro quo case, it said.
Prasad, who sold Matrix Laboratories for Rs 915 crore in 2007, had floated about 20 other companies with his family members and employees as directors between 2004 and 2008 only to overcome urban and agriculture land ceiling Acts as he had heavily invested in immovable properties, the investigative agency believes.
On the quid pro quo between Jagan and his father, who was at the helm of the government, the CBI said the government favours received by Prasad in exchange for his ‘investments’ into the former’s companies was not just confined to Vanpic Project alone. For example, he had got exemption from the Urban Land Ceiling Act provisions on the 5,764-square metre held by his family members.His relationship with Jagan started in 2006 with his first investment of Rs 20 crore in Carmel Asia Holdings Limited Private Limited owned by Jagan. Subsequently, he made a total investment of Rs 854.50 crore in seven of Jagan companies, including Jagathi Publications, which operates Telugu daily Sakshi and a television news channel by the same name.
The CBI has also alleged that Prasad had disposed of unusable and non-core assets of Matrix Laboratories to his own companies and, thereby, he wrongfully gained Rs 72.50 crore. “It is also revealed that Prasad had concealed his interest in the transaction of land to the board of Matrix Laboratories Limited for which he acted as the chairman,” the chargesheet said.
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More Valuable than Money
What’s the most valuable thing you have and it’s not money? It’s time.All the money in the world won’t give them back lost time.”-said Will Hardee, senior vice president at Royal Bank of Canada’s Wealth Management office in Houston in a fascinating article on America’s fourth richest woman