SocGen says used one trader to unwind $73 billion of deals

Discussion in 'Wall St. News' started by ASusilovic, Jan 28, 2008.

  1. PARIS (Reuters) - French bank Societe Generale said on Sunday it used one sole trader to unwind 50 billion euros ($73.3 billion) worth of positions following its discovery of an alleged fraud at the bank.

    "We used just one trader," Jean-Pierre Mustier, the chief executive of SocGen's corporate and investment banking unit, told reporters on a conference call.

    Mustier declined to identify the SocGen trader, but said he was a "very senior guy in the organization." The bank unwound the position from Jan 21-23, with markets already under pressure from concerns over global credit losses.

    Police are questioning 31-year-old SocGen trader Jerome Kerviel over the alleged fraud, which led to 4.9 billion euros worth of losses at the bank. SocGen said the nominal amount of the fraudulent position was around 50 billion euros.

    Mustier said the unraveling of Kerviel's trades showed it was feasible for one trader alone to have caused the fraud.

    "For matters of confidentiality, when we found out about the transaction we just had one trader, just one trader, to unwind the transaction. If one trader could unwind the transaction, one trader could put on the transaction."

    Cool. Unwinding 50 bn...:cool: :cool: :cool:
  2. dont


    Not a very good trader, loses 10%

  3. Do you really believe SocGen did not profit from the knowledge of unwinding such a huge position ? Maybe they were collaborating with other French banks...I wouldn´t rule out any "possibility"....

    Mustier´s explanation "For matters of confidentiality, when we found out about the transaction we just had one trader, just one trader, to unwind the transaction." is just for the mass media and the public...

    Just my 2cent oppinion...
  4. dont


    Yeah they profited to the tune of -$7bln


    Seriously, I would expect a bank that size to be a little more adept at trading a position that size, they could have sold calls against the position or bought puts.
  5. I wonder whom of the executives / friends / family etc took on a decent position in options? Risk free trade imho.

  6. iF THEY had sold half a milllion Dax contracts at the same time they hit the ESTX , wouldn't they have made some money or limited the damage ? or they could have sold short US, German French equities or simply the ESTX50 components .
  7. As we would say here down under: Yeah right ...

    Sometimes you can overdo the ... (proverbial bovine brown matter).

    My 4 year old cousin comes home: "daddy I have been a good boy, I have not been close to the water".

    Dad praises him.

    I remark: "Did he not go out with his trike?" "Where is your trike boy?"

    "whaaaaaa......" (it was sitting next to the pond)

    Unwinding that much by one trader? Seriously.....

  8. Maria,

    that´s really "gentleman"-like expressed...:D
  9. How They Got Out

    Rogue trader acting alone?
    The tune is changing:

    “I cannot guarantee to you 100 percent that there was no complicity.”
    Jean-Pierre Mustier, chief executive of the bank’s corporate and investment banking arm

    How they got out