http://www.iht.com/articles/2008/02/29/business/29trader.php
By Michael M. Grynbaum
International Herald Tribune
February 29, 2008
For nearly two decades Evan Dooley quietly made a living trading
commodities like wheat in his home state, Tennessee, far from the
hurly-burly of Wall Street.
But on Thursday, Dooley, 40, became the talk of the financial markets
when MF Global, the giant commodities brokerage, accused him of making
unauthorized trades that led to $141.5 million in losses for the firm.
Dooley, the firm said, wagered on wheat futures with money he did not
have.
Dooley, who worked in the firm's Memphis office, had bought as many as
15,000 wheat futures, the equivalent of about 10 percent of the market
for these contracts for any given month, company officials said. MF
Global discovered the trades early Wednesday morning and ran up the
losses as it desperately unwound the positions in a volatile market.
"This is a very disappointing situation for us," said Kevin Davis, the
chief executive of MF Global, on a conference call with investors and
journalists Thursday. Shares in the company plunged nearly 28 percent.
It was the second high-profile case of a single trader's bad bets
causing losses for a global financial firm. MF Global's troubles,
however, are small compared with the multibillion-dollar hole left in
Socit Gnrale after Jrme Kerviel secretly wagered the bank's money on
stock futures.
Like Socit Gnrale, MF Global has an electronic system designed to
prevent brokers from trading beyond their means. The French bank has
said that Kerviel circumvented its controls for more than a year with a
complex scheme involving computer hacking. But MF Global's safeguards
failed for a simpler reason: The firm had deactivated them for certain
traders, including Dooley, because the controls slowed transactions.
Dooley, who is known as Brent, was dismissed by MF Global after his
trades were discovered. He could not be reached for comment on Thursday.
The losses may have been exacerbated by a spell of volatility that has
affected the wheat market in recent weeks, spurred by droughts that have
suppressed supply even as demand spiked.
"You've seen moves in a day that you'd expect to see over a month,"
Davis said, referring to the wheat market. "The size of the market has
grown quite dramatically."
Wednesday was a particularly bad day to sell off the unwanted positions.
Wheat futures plunged in the morning and then spiked in the afternoon.
"Throwing someone into a lions' den is about what it's like," said Vince
Boddicker, manager of Farmers Trading in Mitchell, South Dakota.
Friends and colleagues said they were surprised to hear Dooley's name in
the news. He grew up in a small town in central Tennessee, they said,
and has spent most of his life in the state.
"I certainly wouldn't want anyone portraying him as a shady guy, because
he wasn't," said Chris Cornell, a corporate bond trader who pledged the
Sigma Alpha Epsilon fraternity with Dooley at the University of Memphis.
"He is friendly, outgoing, he was good fraternity brother. I would sure
like to know the rest of the story."
Dooley graduated from the university's business school with a bachelor's
degree in finance in 1991. Former classmates said he played intramural
basketball and football and held several officer titles at his
fraternity.
He began his career in finance working part-time at McVean Trading and
Investments, a commodities brokerage firm based in Memphis, while still
an undergraduate.
"He was just an average kind of kid," said Llewellyn Hall, the firm's
vice president of compliance. "He didn't leave under bad terms, or I
would have remembered it."
Dooley left McVean in 1994 and then went on to work at a half-dozen
financial firms, according to regulatory filings. He had been working on
commission at MF Global since November 2005, according to a company
spokeswoman.
"He sort of lucked into it more than anything," Cornell said.
James Whitehead, a partner at Shoemaker Financial, a Memphis firm, who
was in Dooley's college class and fraternity, said they last spoke over
breakfast two weeks ago.
Dooley had recently discussed some of the stresses that come with middle
age, Whitehead said.
"I think as a businessman, family man, you go through stresses, just the
stress of life," Whitehead said. But Dooley's worries did not strike
Whitehead as out of the ordinary. "Nothing that would throw up a red
flag to me."
Copyright 2008 the International Herald Tribune All rights reserved
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