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Whale Watching on the Trading Floor: Unravelling Collusive Rogue Trading in Banks


  • Hagen Rafeld

    () (TU Dortmund University
    Frankfurt Institute for Risk Management and Regulation (FIRM))

  • Sebastian G. Fritz-Morgenthal

    () (Frankfurt Institute for Risk Management and Regulation (FIRM)
    Bain & Company Inc.)

  • Peter N. Posch

    () (TU Dortmund University)


Recent history reveals a series of rogue traders, jeopardizing their employers’ assets and reputation. There have been instances of unauthorized acting in concert between traders, their supervisors and/or firms’ decision makers and executives, resulting in collusive rogue trading. We explore organizational misbehaviour theory and explain three major collusive rogue trading events at National Australia Bank, JPMorgan with its London Whale and the interest reference rate manipulation/LIBOR scandal through a descriptive model of organizational/structural, individual and group forces. Our model draws conclusions on how banks can set up behavioural risk management and internal control frameworks to mitigate potential collusive rogue trading.

Suggested Citation

  • Hagen Rafeld & Sebastian G. Fritz-Morgenthal & Peter N. Posch, 2020. "Whale Watching on the Trading Floor: Unravelling Collusive Rogue Trading in Banks," Journal of Business Ethics, Springer, vol. 165(4), pages 633-657, September.
  • Handle: RePEc:kap:jbuset:v:165:y:2020:i:4:d:10.1007_s10551-018-4096-7
    DOI: 10.1007/s10551-018-4096-7

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    References listed on IDEAS

    1. Leaver, Meghan & Reader, Tom W., 2017. "Safety culture in financial trading: an analysis of trading misconduct investigations," LSE Research Online Documents on Economics 69210, London School of Economics and Political Science, LSE Library.
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    9. Fouquau, Julien & Spieser, Philippe K., 2015. "Statistical evidence about LIBOR manipulation: A “Sherlock Holmes” investigation," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 632-643.
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    13. Jan Kregel, 2013. "More Swimming Lessons from the London Whale," Economics Public Policy Brief Archive ppb_129, Levy Economics Institute.
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    More about this item


    Behavioural risk; Collusion; Corporate culture; Misconduct; Organizational misbehaviour theory; Rogue trading;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • P37 - Economic Systems - - Socialist Institutions and Their Transitions - - - Legal


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