Rogue trader Leeson rides to the aid of spread betters in over their heads

Back in 2009, when a friend first told Grant how easy it was to trade on the currency markets, it sounded less like gambling and more like an intellectual pursuit.

His first few trades went well. “ I put £100 in and I made £600. And I was like: ‘Whoa, that’s ridiculous,” he recalls. “I thought: ‘If I can just get this right, I can turn this into a job.’”

After eight years, he had lost about £50,000, including his savings, maxed-out credit cards and payday loans. After the birth of his first child in 2017, he was close to giving up entirely. It was at that moment, as his trades were dwindling, that IG, the spread-betting site he was using, contacted him and offered to upgrade his account. Moving from a retail account to a professional account would allow him far more leverage –  a key difference between ordinary gambling and trading on spread-betting sites.

In a casino or betting shop, you can only lose what you came in with. With trading platforms such as IG, clients only need to put down 20% of a trade’s value as margin, but gains or losses are calculated on the full position size. Each time he made a trade, Grant risked losing up to £50 for every £1 he put in.

IG makes it clear to customers that 71% of retail clients lose money but that did not put Grant off. Privately educated and a graduate of a top university, he was confident he would be in the minority. He assumed that if he scoured the latest financial news, he would be able to see the patterns and predict fluctuations, allowing him to buy and sell at just the right moments.

The offer of an upgrade came just as the EU was bringing in new legislation aimed at protecting non-professional traders such as Grant. The new rules meant that his leverage was more restricted – he could only lose up to £30 for every £1 he put in but he could not win as much either.

But with a professional account, Grant lost the protections afforded by that legislation; he now had a leverage ratio of 250:1 to play with.

The EU legislation set out eligibility criteria for professional clients. They need to have made significant trades in the last year, have professional experience of trading derivatives and have more than £425,000 in savings. Grant says it would have been obvious, even with cursory checks, that he did not meet the threshold.

He ticked the right boxes on the forms but IG did not ask for a bank statement. If it had, it would have noticed his lack of funds and all the payments going to payday loans. Instead, he says, he was upgraded in a matter of a few hours. He did not tell his wife what he was up to.

Grant was making dozens of trades a day; on his worst day, he estimates he lost £11,000. “I was in a state of panic. I was just throwing money into positions that were losing just to keep them alive in case it turned around,” he says. “I’d be absolutely wrecked with stress, anxiety and guilt. And then I’d walk out of my office, switch back to normal and come down to make dinner.”

It was only in 2024, when he defaulted on their mortgage, that his wife realised what was going on. “She rightly went absolutely ballistic.  It was probably one of the worst times of my adult life.”

Grant says he would have been too ashamed to complain to IG if it were not for the fact that he knows the man who is helping him try to recoup his losses has faced far more public shame than he could ever imagine.

In the 1990s, Nick Leeson was working for Barings, then the UK’s oldest merchant bank. Based in Singapore, he began making risky, unauthorised trades. He hid his losses, which grew year on year as he tried to win the money back. By the time he was caught, he had cost the bank £827m, forcing it into insolvency. Oversight was lacking. Even so, Leeson does not try to absolve himself of responsibility. “There were definitely no systems and controls in place, but it was all self-inflicted,” he says now. “I knew what I was doing and I knew I shouldn’t be doing it.“

After serving four years in a Singapore prison, Leeson went on to publish a book that was later made into the film Rogue Trader starring Ewan McGregor. These days, he works for Red Mist, a corporate intelligence investigations company helping people who have lost money.

In Grant’s case, that means navigating the complex complaints process at the Financial Ombudsman Service (FOS). Leeson takes a 10% cut of any rewards but his clients know however humiliated they feel, their losses pale in comparison with the former trader’s. “I’ve been embarrassed on a world scale. And I can never completely get away from it,” Leeson says.

Complaints about IG have kept the FOS busy. IG has been the subject of more than 420 in the last five years, according to the ombudsman’s press office. That is more than three times as many as its closest competitors. IG is also facing a class action lawsuit in Australia from clients who lost money on specific IG products which that have since been banned in the UK by the Gambling Commission.

IG claims it has a strongly enforced vulnerability policy and an algorithm that alerts brokers if a client has a gambling problem. But Grant says in the 15 years he was trading with IG, no one ever called to ask how he was doing, even when he was losing thousands of pounds a week.

According to a former IG employee who has worked in the industry for more than 20 years, most contact is automated and brokers almost never talk to clients.

“There isn’t regular checking if circumstances change. It’s very rare that a client would be flagged – they would have to self-identify as having a problem,” says the former employee.

IG says it is “fully committed to adhering to all regulation and that it consistently meets or exceeds regulatory requirements, including a rigorous professional upgrade process”.

While IG makes it clear on its website that a majority of its clients lose money, it is less clear to what extent the company benefits from those losses. When a client places a bet on a spread-betting company’s website, they are only placing a bet on its platform, which mirrors the market. Companies such as IG are under no obligation to transfer that bet on to the real market.

According to multiple industry insiders who spoke to The Observer, if a client repeatedly loses, their trades are kept in-house, while those few clients who tend to make money have their bets placed on the real market to ensure that the broker is not liable for any payout.

“It’s not as widely known among retail investors but it’s probably more bias to the house than a casino or a bookmaker because they have the data – they can follow your trades,” Leeson says.

On its website, IG acknowledges that most speculative traders tend to lose; it says it does not “aim to” or “typically” benefit from those losses. Asked what percentage of its revenue comes from client losses, IG declined to answer, stating only that “it does not monetise client losses” and that it implements “a risk-based hedging strategy to offset exposure to our clients’ positions”.

But according to the former IG employee, a large percentage of the revenues of almost all spread-betting companies depend on people such as Grant making bad decisions.

“People  don’t really understand that it’s not in the company’s interest to make sure clients become amazing traders – to make sure they don’t lose money,” the source says. “They will give lots of information, but not what they really should be telling them, which is: ‘Don’t leverage and don’t trade too often.’”

Even if the ombudsman finds in Grant’s favour, IG will only have to pay back the money it took from him. The ombudsman is not able to levy any penalties to incentivise companies such as IG to avoid bad practices in the future.

Grant hopes any money he gets back will go towards paying off the credit cards and payday loans he still owes – and perhaps go some way towards saving his marriage.

Photograph by Alamy