Exactly How Do You Hide $73 Billion In Fraudulent Trades?
from the bet-big,-lose-big dept
At the end of last week, the latest banking scandal started hitting the wires as news broke of a low level trader for the French bank Societe Generale was somehow able to lose the bank $7.2 billion by sneaking around various control and security systems to make a series of complex bets, well beyond what he should have been allowed to do. Many people are comparing it to the case of Nick Leeson, who brought down Barings bank over a decade ago -- though, with Leeson, it only took a little over a $1 billion. And, over the weekend, the details got worse. That $7.2 billion loss came on bets up to $73 billion. It certainly raises plenty of questions about the controls that are in place. No matter how sneaky you are, you would think that $73 billion would be pretty hard to trade without anyone noticing. Apparently not. The trader in this case, Jerome Kerviel, supposedly had a detailed understanding of the security systems thanks to an earlier job at the bank, that involved monitoring the trading systems and then used other people's accounts and falsified documents to hide his tracks. Even so, you would think that someone would have taken notice of $73 billion moving around. Societe Generale claims that, unlike Barings, it can easily survive this fraud and will even turn a profit. Of course, at the same time, it also announced it needs to raise $8 billion -- and given the size of the loss, that certainly makes it sound like the bank needs to replace that money pretty quickly.Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
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Filed Under: billions, fraud, jerome kerviel, security controls, trading
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Slowly
http://www.independent.co.uk/news/europe/rogue-trader-the-man-who-saved-the-world-or-not-7746 58.html
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Re: Slowly
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Don't you find it odd...
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which makes me wonder:
Is he really the cause or just a scape goat, if he really is the only one involved that bank has some serious security issues.
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Re:
By working in the backroom trading facility before he started trading Jérôme knew those rules and was able to get around them.
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Professional Gain
Imagine everything had worked out perfectly, and he made his company BILLIONS of dollars. As a hot-shot banker, you gotta believe that he thought that might propel him up the corporate ladder... And what a reputation he'd have.
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I have trouble getting excited over this
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Re: I have trouble getting excited over this
He was trading derivatives and "bets" is not a bad or unfair characterization.
When you go to Monte Carlo the rules of the game are known and you can calculate your odds. Its seems pretty clear that in the current meltdown there were lots of Wall Street types who did not did not understand the rules and could not calculate the odds. It brings to mind the old advice: if you sit down at a poker table and can't spot the mark - you're the mark.
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Re: I have trouble getting excited over this
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Speling errors
It is: Jérôme Kerviel and Société Générale
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Re: Speling errors
American keyboards don't have those keys, and such characters must be typed by pressing Alt-0224, Alt-0232, etc. We don't usually bother.
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Re: Speling errors
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Re: Re: Speling errors
Damn, that must have taken you a while. Your depth of devotion touches my soul.
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A must watch
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If you read the article he actually he did make a billion or so, but because he could not explain it to the bank he had try to lose it, problem was he over did it and went from about a billion plus in the black to a billion plus in the red
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Also...
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SocGen Resume
http://razume.com/resume/view/916
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