Read the announcement from Societe Generale here (six page pdf).
The rogue trader lost €4.9 billion through a series of fictional transactions.
Generale aren’t naming him, but apparently the trader dealt in plain
vanilla European stock market index futures and concealed his losses
through in-depth knowledge of the bank’s control systems, which he had
gained from his earlier role processing trades at the bank. Doesn’t it
just go to show that a little knowledge of technology can go a long way!
The bank only found out last weekend and are now in the process of getting rid of the little tinker.
on another €2 billion the bank is writing off due to the credit crunch,
and you would think with a sudden €7 billion hit that the bank would be
in real trouble …
… but they still claim to have made an €800 million profit (€5.22 billion a year earlier), so it’s all OK then.
This is something that I made comment upon three years ago,
and the issue is the same today: a trader who is now in front office with
access to middle or back office processes. That creates operational
risk and virtually every occurance of rogue trading has been for the
The only saving grace this time is that, talking to
one of my English friends involved in the financial markets in Brussels
tonight, she tells me that every time they want to pull her down a peg
or two in Brussels, they say "le Northern Rock, eh?" and smirk.
Apparently, she is now going to retort "et le Societe Generale?" …
thank the lord for politics and Europe.
Meanwhile, elsewhere in
the City, the head of enforcement at the FSA, Margaret Cole, is
apparently bringing a prosecution against Christopher McQuoid, 39, and
James William Melbourne, 74. These two alleged tricksters are to be
accused of insider dealings related to the £103 million (€150 million)
offer by Motorola for TTP Communications in June 2006.
meant to be a big deal to show how strict the FSA is becoming over
insider trading … instead it’s a little show with no star names
Bet Margaret wishes she was in Paris right now.