(By Dr. Joseph W. Koletar) It is not unusual for financial sector brigands to express some remorse once their misdeeds have come to light. Such actions may be lucrative – paid speaking engagements, advising corporate Boards on why they should be more attentive, etc.

The Wall Street Journal of April 30 – May 1, 2016 explores such issues in a page-one article titled “A Disgraced Trader’s Bid for Redemption.” The article focuses on Alexis Stenfors’ fall from grace after a highly successful and remunerative career as a trader for several big banks. One of his early mentors claimed he was the best young trader he had ever trained.

Mr. Stenfors’ career responded accordingly – he prospered and made millions of dollars for his employers. He married and began a family, enjoying the fruits of his labors, and was given his own trading desk in London. His firm believed a man of his talents should not be included as but one of the herd of also bright and ambitious traders. As a lyric from an old song goes, “That’s when the trouble began.” His friends and co-workers later commented that even when engaged in recreational activities such as squash, he would blurt out an idea for a trading deal or strategy. It was if trading was his essence and all else was peripheral.

The article recounts in 2005 Mr. Stenfors was then employed by Merrill Lynch (ML.) He later claimed he was encouraged to take big risks and aim for huge profits. To add to the earlier song lyric, “That’s when the trouble got “silly-deep.” Mr. Stenfors became involved with other traders in other financial institutions, and their actions began to trouble even him. It looked like they were playing around with LIBORS, a key global interest rate-setting indicator. The article recounts he walked away from at least one potential deal because he found it too “dodgy.”

As wise as that decision may have been, he had plenty of troubles on his own doorstep. Financial markets worldwide were crashing. He was working impossible hours trying to keep the ship afloat and his health was deteriorating rapidly. Even so, he kept trading constantly and later claimed he felt he had a “loyalty” to ML to get it through this crisis in the international financial markets. At one point he is said to have commented that he was “addicted” to trading. Accordingly, there came a day when he made a huge financial bet on the future movement of the market. If it worked, and he guessed correctly, he would be an even-richer star. If it failed, the ship would be in a danger.

His analysis was wrong, and huge financial rocks littered the shore in front of him and ML. It was at this point, the WSJ reports, that he decided to mask the real and potential losses in the hope that the tide would soon turn in his favor. At some point it became obvious his skills and energy could not stem the tide and, per the article, he called his boss with the prophetic words: “I have something I need to tell you.”

As his actions were duly investigated and sanctions rained down upon him, he reassessed his life. He had always wanted to earn a PhD in economics, and did so. He then embarked on a process of educating young students as to perils of the “market,” noting he had “lost it” and come to the point where he thought 100 million dollars was not a lot of money. As apparently sincere as his remorse was for his prior actions, he later made a telling comment to the effect that traders are by nature risk-takers, and the rules of ML operated to deny him his opportunity for “self-actualization.”

Herein lies the rub. “Self-actualization” is an old term in psychology and usually refers to finding the true meaning in your life; of coming to peace with your role in the world, be it great or small; of casting aside the frivolous for the important; of looking back and feeling a degree of contentment that you found yourself, and not the “self” imposed on you by circumstances and traditions.

But the “rules” got in the way?

All organizations have “rules” that are petty, out-dated, or counter-productive. The problem is not so much the rules, as it is the organization. Rules are easy to create, but are rarely reviewed like junk that piles up in the attic or garage. Thus, each employee is left to determine which rules are important and which are not.

That is where Mr. Stenfors appears to have slipped. For most people, on most days, $100M is important, but as he himself noted, he was “addicted.” Just another silly rule.

© 2016
Joseph W. Koletar

The Behavioral Forensics Group is a team of professionals with vast experience in detecting fraud, understanding why it occurs, and in recommending steps to mitigate fraud incidence within the corporate workplace, particularly within higher-level (and therefore more costly to the enterprise) executives.  The fields of investigation, organizational psychiatry, accounting and behavioral forensics, and law enforcement are represented within the Behavioral Forensics Group.  Acting in synergy to help organizations prevent, find, and/or reduce fraud, BFG is a premier, pioneering practice in this field.

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