phyzik
01-25-2008, 06:53 PM
:dizzy :greedy :spless:
http://www.reuters.com:80/article/topNews/idUSL2422020620080124?feedType=RSS&feedName=topNews
Thu Jan 24, 2008 6:07pm EST
SocGen reels from record $7 bln rogue trader fraud
By Sudip Kar-Gupta
PARIS (Reuters) - A junior computer whiz at French bank Societe Generale was accused of racking up a $7 billion loss in bad bets on stocks in the biggest trading scandal in banking history.
France's central bank and government scrambled to shore up confidence in the banking system after the 144-year-old SocGen told investors already battered by the credit crisis that it discovered the "exceptional" fraud late last week.
The trader had circumvented the bank's risk controls through in-depth knowledge of its computer systems, but was caught when he tried to cover up his losses.
The country's central bank chief dubbed the trader "a genius of fraud" while French police announced a criminal probe.
Richard Fuld, the chief of Wall Street firm Lehman Brothers , called the debacle "everyone's worst nightmare" at the meeting of policy and business leaders in Davos.
The losses spiraled to 4.9 billion euros ($7.1 billion) -- nearly its net profit in 2006 -- as the bank tried to close out the rogue trader's stock index futures positions in Monday's sliding market.
"We get the feeling that the financial markets have become a big casino which has lost control. It seems incredible that the Societe Generale can lose 5 billion through one operator," said Alain Crouzat, a portfolio manager at Montsegur Finance.
SocGen declined to identify the trader, but three SocGen sources named him as Jerome Kerviel, 31, a trader on the bank's award-winning equity derivatives desk earning less than 100,000 euros a year.
http://www.reuters.com:80/article/topNews/idUSL2422020620080124?feedType=RSS&feedName=topNews
Thu Jan 24, 2008 6:07pm EST
SocGen reels from record $7 bln rogue trader fraud
By Sudip Kar-Gupta
PARIS (Reuters) - A junior computer whiz at French bank Societe Generale was accused of racking up a $7 billion loss in bad bets on stocks in the biggest trading scandal in banking history.
France's central bank and government scrambled to shore up confidence in the banking system after the 144-year-old SocGen told investors already battered by the credit crisis that it discovered the "exceptional" fraud late last week.
The trader had circumvented the bank's risk controls through in-depth knowledge of its computer systems, but was caught when he tried to cover up his losses.
The country's central bank chief dubbed the trader "a genius of fraud" while French police announced a criminal probe.
Richard Fuld, the chief of Wall Street firm Lehman Brothers , called the debacle "everyone's worst nightmare" at the meeting of policy and business leaders in Davos.
The losses spiraled to 4.9 billion euros ($7.1 billion) -- nearly its net profit in 2006 -- as the bank tried to close out the rogue trader's stock index futures positions in Monday's sliding market.
"We get the feeling that the financial markets have become a big casino which has lost control. It seems incredible that the Societe Generale can lose 5 billion through one operator," said Alain Crouzat, a portfolio manager at Montsegur Finance.
SocGen declined to identify the trader, but three SocGen sources named him as Jerome Kerviel, 31, a trader on the bank's award-winning equity derivatives desk earning less than 100,000 euros a year.