<b>Societe Generale Franceâs second-largest listed bank said on Thursday it had suffered a rogue trader-type fraud costing â¬4.9bn which will have a â¬4.9bn ($7.16bn) negative impact on the group. </b> The bank also announced further writedowns of â¬2.05bn related to the global credit crunch and said it would raise â¬5.5bn through a capital increase to strengthen its balance sheet. Societe Generale Group (the Group) has uncovered a fraud, exceptional in its size and nature: one trader, responsible for plain vanilla futures hedging on European equity market indices, had taken massive fraudulent directional positions in 2007 and 2008 beyond his limited authority. Aided by his in-depth knowledge of the control procedures resulting from his former employment in the middle-office, he managed to conceal these positions through a scheme of elaborate fictitious transactions. There is no residual exposure in relation to these positions, which were discovered and investigated on January 19th and 20th, 2008. It was decided to close these positions as quickly as practicable in the best interests of market integrity and the Groupâs shareholders. Given the combination of the size of the positions and the very unfavourable market conditions encountered, this fraud has a negative impact of Euro 4.9bn that the Group has decided to recognise in its 2007 pre-tax income. The traderâs positions have been reviewed and a thorough analysis of all his departmentâs positions confirmed the isolated and exceptional nature of this fraud. The employee who has confessed to the fraud has been suspended and a dismissal procedure has been initiated. The individuals in charge of his supervision will leave the Group.
lol i love how they are trying to blame 5 bil in losses on ONE trader! lol wtf were they doing to control their risk so ONE trader couldn't light 5 billion on fire?!?! they just need to admit they blew it and move on.
'Aided by his in-depth knowledge of the control procedures resulting from his former employment in the middle-office, he managed to conceal these positions through a scheme of elaborate fictitious transactions.' Easiet way to become a Billionaire!
Makes Nick lessons little dabble in Barings look like pocket change and he got 6 years in the Big House and a reasonable movie actually our floor director taught him his hand signals and got to be an extra in the movie as well.
i am stunned. how - with all the in depth backoffice knowledge in the world - can you possibly hide this size of positions? just ... how can you hide thousands of contracts? and obviously for longer than a day?
Too bad they didn't detail the positions, but I wouldn't be surprised if they added fuel to the fire of Mondays (21st) chaos in European markets.
The French are incredible. Do they reallyexpect anyone to believe this bullshit. "Its wrong to be French" - Al Bundy. Rule No. 1
Absolute class! And they choose to liquidate on a US holiday thus forcing markets to tank and the Fed into an emergaency 75bp cut. That is some achievement.
Phrenchie about his friend: "Zis guy is ze world's best trader." ...silence & raised eyebrows... "Nono. I'm zerious, he is ze best."