A study of organisational anomie and derivative mishandling

Abstract

Over the years, companies suffering huge financial losses have always pinned the blame either on ‘derivatives’ or on what we today call ‘rogue traders’. Single individuals have always been accused of single handedly bringing down multimillion dollar companies overnight, trading in derivatives. Durkheim (1899/2008) claims that “When society suffers, it needs someone to blame, someone upon whom to avenge itself for its disappointments; and those persons whom opinion already disfavors are naturally singled out for this role”. The aim of this thesis is to determine whether these individuals acted out of their own free will (or greed) or whether other forces, in this specific case, anomie is to blame. Some social and psychological indicators of anomie were considered for this study. The works of Durkheim, Merton and Cohen on anomie were explored together with literature by McClosky & Schaar on psychological aspects of anomie. A mixed methodology of qualitative and quantitative analysis was used to determine whether traits of anomie were present in a number of case studies and whether the actions of rogue traders can be attributed to anomie? The latter situation was analysed by means of a web based questionnaire administered to a number of individuals trading in derivatives. The study identified various traces of anomie to which the individuals in the case studies were particularly vulnerable. These included education, or lack thereof, age and psychological inflexibility. Fetishism of money emerged as a factor which is correlated and could predict derivative mishandling. Education was also a determining factor in derivative mishandling which transpired both from the case studies and also from the questionnaire. This study adds to the increasing body of literature on derivative mishandling and tries to associate this behaviour with anomie.