Barings was a British bank, which collapsed following one of the most talked-about UK financial scandals of the 1990s.
Nick Leeson, a middle-manager with only two years trading experience, was put in charge of trading derivatives on Japan's Nikkei exchange. Not only was he put in charge of trading; he was also put in charge of accounting for his own transactions. This meant that he could hide his own bad deals with false accounting.
Derivatives are risky financial instruments which can make or lose large amounts of money in a short space of time. Trading derivatives can be similar to gambling. Leeson ran up losses, and then tried to make the losses good with bigger and bigger bets. Eventually he ran up losses of over a billion dollars, enough to cause the bank's collapse.
One of the lessons from the scandal was this: Don't give an inexperienced manager control over both doing deals, and reporting deals - especially if senior management doesn't understand what he's doing. The pressure to report good news may lead to too much risk, hidden problems, and eventual bankruptcy.
Obviously all the lessons were learned immediately around the world. Hence, Enron and Northern Rock never happened. Ahem.
