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A FORMER TRADER for Allfirst Bank (a U.S. mid-Atlantic regional bank known in 2004 as M&T Bank), John Rusnak pleaded guilty to bank fraud on October 24, 2002, in connection with the $691.2 million the bank lost through his foreign-currency trading.

Rusnak, hired by Allfirst as a trader in 1993, suffered trading losses buying yen for the bank in 1997. He then began to hide some losses, and the size of reported losses by using fictitious options and changing the currency exchange rates which came into the bank's trading system. False trades disguised the fact that Rusnak was also trading over his limit and taking risks that were too high. The 2002 Ludwig Report on the incident found that Rusnak broke rules that should have offered ...

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