Wonder if this could have happened at a US bank? I would hope that we have a somewhat more sophisticated system for catching shit like this...
I believe Societe Generale management is just all around careless and sloppy. They also lost billions in the subprime mortgage crisis. I wonder if there are other rogue traders at Societe Generale hiding big losses. http://edition.cnn.com/2008/BUSINESS/01/27/societegenerale.trader/?iref=mpstoryview Societe Generale said it would post additional writedowns of â¬2.05 billion ($2.99 billion) because of exposure to the U.S. subprime mortgage crisis. It means the bank would devalue its assets because it had bought U.S. subprime mortgages which might not be repaid.
I am reading that Mustier is considered the man most likely to succeed Societe Generale CEO Bouton. I suspect management encouraged aggressive trading. http://www.reuters.com/article/reutersEdge/idUSL2718842620080127?pageNumber=2&virtualBrandChannel=0 "Mustier runs SocGen's investment banking business, headquartered in Paris's flashy high-rise office district of La Defense, where Kerviel worked. The unit accounted for 40 percent of the group's net income in the first half of 2007." "Mustier also led SocGen's bold expansion into financial derivatives, hiring mathematicians from elite French universities to dream up increasingly complex instruments based on futures and options contracts." "bonuses, a key part of a bank's strategy of securing high-flying staff, are already being cut"
That is interesting, amazing actually. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1767285>
FRENCH TRADER WAS FORCED TO WORK 30 HOURS A WEEK FRIENDS of rogue trader Jerome Kerviel last night blamed his $7 billion losses on unbearable levels of stress brought on by a punishing 30 hour week. Kerviel was known to start work as early as nine in the morning and still be at his desk at five or even five-thirty, often with just an hour and a half for lunch. One colleague said: "He was, how you say, une workaholique. I have a family and a mistress so I would leave the office at around 2pm at the latest, if I wasn't on strike. "But Jerome was tied to that desk. One day I came back to the office at 3pm because I had forgotten my stupid little hat, and there he was, fast asleep on the photocopier. "At first I assumed he had been having sex with it, but then I remembered he'd been working for almost six hours." As the losses mounted, Kerviel tried to conceal his bad trades by covering them with an intense red wine sauce, later switching to delicate pastry horns. At one point he managed to dispose of dozens of transactions by hiding them inside vol-au-vent cases and staging a fake reception. Last night a spokesman for SócÃété Générálé denied that Kerviel was overworked, insisting he lost the money after betting that the French were about to stop being rude, lazy, arrogant bastards. Source: www.thedailymash.co.uk
KERVIEL Jerome Jeromekerviel@hotmail.com OBJECTIVE Reach a position as a retail listed derivative products trader, managing a volatility and Delta One book EDUCATION MASTERS in Finance (Organisation and Control of financial makets) University of Lyon, September 2000 Bachelor Degree in Finance University of Nantes, 1996 1999 WORK EXPERIENCE Societe Generale S.A., Paris, France Trader and Market Maker for Delta One Products March 2004 - Today Trading : Market making of Listed Delta One products Including open end and closed end Turbos (Single Stocks, Index, Forex and Rate Futures), ETFs and secondary market for Certificates ETFs structuration - Management of the collateral with Lyxor Asset Management Development of managing tools (Excel VBA macro) New Underlyings Study to develop the product range Participation to the specification for the implementation of turbos to the Clickoptions platform Societe Generale S.A., Paris, France Trader Assistant - Basket Trading and Delta One Products August 2002 - February 2004 Valuation and Risk Analysis explanation for Basket Trading (Single Arbitrage book) and Delta One Products Strategies Backtestings Short positions hedge Process automation and managing tools development Societe Generale S.A., Paris, France Middle Office - Referential Team August 2000 - July 2002 Products modeling Process automation Excel macro Development for the exotic Desk Participation to the single referential project ACTIVITIES Judo - 8 years practice - Trainer for children Sailing SKILLS English : working language Microsoft Office Packge - Visual Basic Licensed for EUREX, XETRA, EURONEXT http://www.thedeal.com/dealscape/2008/01/sg_traders_resume.php
As if this is a shock to anyone ........... Rogue trader in 3.6bn fraud threatens to 'name names' as bank admits he may have had a gang From JULIE MOULT and PETER ALLEN in Paris The rogue trader accused of defrauding France's secondlargest bank out of £3.6billion is believed to have been part of a gang. Executives at Societe Generale had originally insisted that 31-yearold Jerome Kerviel acted alone. They compared him to a "lone arsonist who burnt down a big factory". But yesterday they conceded that he was unlikely to have carried out his deception without accomplices. And in interviews with detectives, Kerviel was said to be "naming names" and refusing to be a scapegoat. As the hunt began for any coconspirators, Societe Generale admitted that although it was the victim of the biggest fraud in history, it could have been worse. Paris-based Kerviel had gambled a total of at least £37billion as his investment losses spiralled out of control - more than the bank's entire market value. In a statement, it said Kerviel built up two portfolios of investments - but that one of them consisted of "fictitious operations", leaving the bank hugely exposed. Detectives are working on information that he made a series of phone calls to traders at other investment banks before news of the scandal broke - allowing them to make highlylucrative deals based on his tips. But Societe Generale has made it clear that Kerviel did not personally benefit from the fraud. Jean Pierre Mustier, one of its chief executives, said: "I cannot guarantee to you 100 per cent that there was no complicity." Today, the junior trader is expected to be charged with an array of complex offences and brought before a court in the French capital. If found guilty of charges including computer misuse and forgery he could be facing a 15-year prison term. Kerviel, who earned a relativelymeagre £75,000 a year, was arrested on Saturday, a week after his catastrophic dealing was uncovered. A team of police financial specialists quizzed him for 48 hours as they tried to unravel the extent of his astonishing deception - four times that of British banker Nick Leeson. Because of the complexities of the alleged crime, it is likely to be many months before the case is ready to be brought against him. Scroll down for more ... Kerviel had been investing the bank's money by hedging on European equity market indices, meaning he betted on how the markets would perform. It was reported yesterday that he is co- operating fully with police during hours of interviews saying: "I can explain everything". Jean-Michel Aldebert, chief of the financial section of the Paris prosecutor's office, yesterday said Kerviel was providing some "interesting facts". "He is collaborating and says he is ready to explain everything. He says he wants to co-operate fully. He's feeling fine. "It's going well. The investigation led by the experts from the financial brigade is extremely fruitful." Family and friends are rallying round Kerviel, whose family home is in Brittany. A neighbour at his apartment block in Neuilly sur Seine said: 'Do you expect us to believe he was the only one in on this? "It's ludicrous in the extreme to believe that just one person could be responsible for all of this." Kerviel's aunt Sylviane La Goff said he had spent the 48 hours before his arrest locked in his brother Olivier's apartment on the Boulevard Hausman with their mother Marie-Jose. As the scandal unfolded, he assured her: "Mummy, I have done nothing wrong." The bank's chairman, Daniel Bouton, is expected to be ordered before the French national assembly's finance commission this week to explain how the massive fraud went unnoticed despite a plethora of so-called safeguards.
I smell a rat here, wonder if the guy is being framed here as a scape goat. Interesting how this will unfold.