We’ve all done stupid things when we’ve had a few. I’ve even done a few myself - such as falling asleep on the train and ending up at the end of the line, forgetting to book a hotel and having to sleep in the office, falling asleep under the table in the reception of the Hilton Hotel in Glasgow, falling asleep on the table at the restaurant where we had our IBM reunion – and that was only a couple of months ago! Sleep and tables seem to be a common denominator!
But the guy who went home from his oil futures trader’s desk and drunkenly spent $520 million must take the biscuit.
He’d actually been trading oil futures (where you buy or sell oil contracts hoping the price moves and you make a profit) in the afternoon and like most traders had ended up in the pub that night. It seems he’d made some losses during the day and when he eventually got home, he decided to try and get his losses back – always a bad move.
In a drunken stupor, London trader Steve Perkins bought 7 million barrels of crude oil in late-night trading from the laptop in his kitchen and actually moved the global price of oil, driving it to an eight-month high, which is no mean feat.
The next morning when he turned up for work at 7.45am (what a trooper) 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.
It was only then that he realized what he’d done and was immediately sacked. PVM Oil then had to unwind all his contracts and lost a rather fortunate $12 million, which I say was fortunate because it could have been a lot worse. Unfortunately, the $12m loss was something like twice the usual annual profit, so Stevie boy’s late night buying binge had cost PVM 2 years worth of profits and they had to sack another 12 employees to cut costs.
The thing was that Perkins wasn’t actually an employee of PVM. He did what many other traders and trading companies do – he only ‘rented’ a trading desk from PVM and used their money to buy and sell oil futures and split any profits (on an annual basis) 50/50 with the company. Up to that night he was $600,000 up and was feted as quite a star. No more my boy – no more!
Thanks goodness my broker only allows me to buy and sell between 8.30am and 4.30pm.
And a final observation: the picture is from PVM Oil’s London website and shows St Paul’s dome, just behind presumably, what is PVM’s building. Given that I worked beside St Paul’s maybe I met Steve Perkins in a bar one night – maybe I’m to blame?