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 ___________________________________________________ Subscribe to InfoSec News http://www.infosecnews.org/mailman/listinfo/isn
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