NAB's forex traders lost A$360M and falsified profits — the CEO and chairman resigned

In January 2004, National Australia Bank announced that it had discovered a A$360 million loss from unauthorised foreign currency options trading. The scandal involved four traders on NAB's foreign currency options desk — Luke Duffy, David Bullen, Vince Ficarra, and Gary Foster — who had been conducting unauthorised spot trades and falsifying profits to trigger bonuses over several years. The traders had been speculating that the US dollar would rise against the Australian dollar and other currencies, a bet that went badly wrong.

The loss was discovered during an internal audit after the traders had been posting fake profits to hide the accumulating losses. The traders had used a combination of unauthorised trades and false accounting entries to cover their tracks. When the scale of the fraud became clear, the bank's board moved quickly. CEO Frank Cicutto and Chairman Charles Allen both resigned in February 2004, along with several other senior executives. The scandal was one of the largest in Australian corporate history.

The Australian Securities and Investments Commission prosecuted the traders. In 2006, Duffy and Bullen were sentenced to jail terms for their role. The bank also paid A$82.5 million to settle a shareholder class action. The scandal prompted a major review of NAB's risk management and internal controls, and led to a complete overhaul of the bank's executive team. The case remains a textbook example of how a weak risk culture and bonus-driven behaviour can destroy a bank's leadership.