When Priyanka Gill got an e-mail from her new fiancé telling her tha t he’d
made £900,000 in a day, she thought he’d typed in a few extra noughts by
mistake. The daughter of a landowner in Punjab, she had been brought up to
believe wealth was built through the steady accumulation of assets - like
her father’s orchards. Fortunes were not won or lost in a day.
“I asked him if he was happy and he said not really, he’d have liked to have
made a million. Then I realised the figure was real,” she says.
Priyanka, whose marriage had been arranged through a friend of both families,
was still trying to work out what Raj did for a living: all she had been
told was that he “did well”. She had no idea, eight years ago, that she was
about to marry one of the most extraordinary lone traders the City has ever
encountered.
Raj, who worked from the dining table at his parents’ home in Ilford, Essex,
was known in financial circles as the “seven to seven” man, because he had
turned £7,000 into £7m in two years in the late 1990s. His uncanny instinct
for stocks increased that to nearly £10m. Then he made a fatal mistake. He
entrusted the lot to Matthew Bomford, a broker who, through a mixture of
incompetence and deceit, lost almost every penny.
Last Wednesday, after a seven-year battle to get his money back, Raj, 37, was
awarded an astonishing £20m in compensation by the High Court. Mr Justice
Flaux ruled that Raj had been duped by a “persistent and inveterate
liar” and said the case had exposed a “shameful” business world of
deception, drug use and fraud.
The following afternoon, sitting with his wife in the bar of a London hotel,
Raj, who staked all he had on the case, tells me his victory has not sunk
in: “But what my case proves is that if you fight for justice - however hard
that is - then there is justice in the end.”
In the wake of the credit crunch it may be hard to feel sorry for anyone whose
conversation is littered with figures that end in five or six noughts, but
Raj is as much a victim of the system as the people who invested their
savings and pensions with institutions they thought they could trust and who
are now having to reassess their futures.
His story began as the classic second-generation Asian success story. “My
father arrived in this country at 16 and worked as a kitchen salesman and as
a mortgage broker. When I was a child he was never home before 10pm because
he was working so hard,” says Raj.
“I knew I never wanted to work for anybody, but at first I had no idea what I
would do. I knew nothing about the financial markets really. At university I
was too busy partying. But I wanted a sports car and I had to find a way of
making enough money to get one.”
While he was studying for a masters in business analysis at the London School
of Economics, he borrowed £2,000 from his father and started dabbling in
shares. He had doubled his money by the end of the year.
On leaving the LSE he opened an account with Deal-wise, a firm of brokers.
Using the £4,000 he’d built up plus a £3,000 career development loan - a
total of £7,000 -he started to trade in earnest. By the end of the following
year - 1999 - he had made more than £7m.
He owed his success to a mixture of doggedness and detachment: “I’d be working
off the table in our living room, sometimes in my pyjamas. The market’s
moving every second, so it requires concentration. If you’re away for even
five minutes things can change a lot.”
Priyanka remembers seeing him for the first time “with three laptops open in
front of him, all the screens covered in tiny figures, maybe 2,000 different
stocks constantly changing, and him somehow watching and tracking every one”.
He worked the UK and US markets simultaneously, starting at 8am and finishing
at 9pm. In court it was said he had made more than 100 transactions even on
his wedding day. “But Indian weddings start in the evening, so he only
worked during the day,” says Priyanka, with loyal indignation.
Raj says growing up as part of the “video game generation” was the key to his
success, not only in honing quick reactions but also in allowing him to
regard share trades as a game in which he was trying to hit the highest
score: “I can’t tolerate losses. As soon as I took a loss on anything, I’d
cut it. Most people get emotional about what they are doing. They run with a
loss, hoping it will one day get back into profit.
“I didn’t always win. I lost £200,000 in a day once, but if I made a loss, I
would block it out. You’ve got to detach yourself. The same goes for profit.
If one of my stocks started rising, I’d let it run. Most people react
emotionally and sell to get the profit. I didn’t think of what I was doing
in terms of money. It was all about the game.”
He was soon too big for Deal-wise. In early 2001 a friend recommended Union
Cal (now MF Global), where his account would be handled by Bomford, a senior
broker. They hit it off immediately. “I thought of him as a friend,” says
Raj. “That’s why what happened wasn’t just fraud, it was a betrayal.”
Once Bomford had received Raj’s instructions to buy or sell certain shares, it
was his job to see the transaction was carried out. Often there were dozens
of such transactions every day. Bomford, who earned £500,000 in bonuses in a
year, was very plausible. Raj had no reason to doubt his credibility: “I
remember him talking about staying at the Sandy Lane in Barbados, the hotels
he’d be off to for the weekend, his tennis lessons, whatever. Sometimes he’d
sound tired and say he’d had a bad night or had a hangover.”
In reality, Bomford had a drug problem. Raj’s transactions were often carried
out hours after he had asked for them - by which time the stock prices had
changed - or were forgotten. Raj’s money started dwindling. To cover his
tracks, Bomford created what the judge called “a parallel universe”,
assuring Raj that the numbers tallied with Raj’s own calculations and that
he had nearly £10m in his account.
Raj suspected nothing. Then, in February 2002, Bomford was off work for the
day and Raj got a call from a colleague telling him there wasn’t enough
money in his account to carry out the trades he was requesting. “We were
just back from holiday in Thailand. I kept saying there’s no way this can be
true,” he says.
It took seven years to get the case to court. Raj was accused of trading
recklessly. Twice it looked as though he might go under completely. The
shock of what had happened - then being taken ill with acute appendicitis -
shattered his confidence. “I had to trade again to make the litigation
costs, but I was trading at 10% capacity and 90% fear,” he says. “Suddenly
the money has become real. I was in a leaky boat and having to trade to bail
out the water.”
Fortunately, many of his telephone conversations with Bomford had been taped.
In one, Bomford is heard clearly telling Raj he has more than £9m in the
account - a claim that, at the time, was completely false.
Even now it isn’t over. Raj is waiting to hear whether MF Global will appeal.
Meanwhile, having won his point - and £20m - he says that he wants to spend
more time with Priyanka and Pranav, their three-year-old son: “I want him to
grow up to be proud of what I’ve done - and I don’t mean making money, but
fighting for what is right.”
