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  1. #1
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    Talking 'Rogue Trader' Costs French Bank $7 Billion

    Crap, how does this compare with France's total GNP? Sometimes things just happen to the right people


    Banking Community Is "Shocked" by Scale of the Fraud.

    LONDON, Jan. 24, 2008

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    A lone "rogue trader" masterminded one of the world's largest banking frauds and cost the giant French bank Societe Generale a breathtaking $7.15 billion.

    The trader, identified by the Financial Times as Jerome Kerviel, has admitted the fraud, Societe Generale's Chairman Daniel Bouton said. Bouton called Kerviel's motives "irrational," saying the suspect did not make any money from his financial manipulations.

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    Societe Generale's massive losses were announced by Bouton in a letter to the bank's customers.

    "Societe Generale Group has uncovered a fraud, exceptional in its size and nature," the bank said in a statement.

    "The individual in question has been dismissed and legal action will be taken against him," Bouton wrote without identifying the suspect.

    It was also announced that the managers and executive managers responsible for the trader will all be removed from their positions. Bouton himself offered his resignation, but this was refused.

    The Financial Times described Kerviel as a Frenchman in his 30s who joined SocGen in 2000. Bank executives told The Associated Press his salary was around $145,000.

    Jean Pierre Mustier, chief executive of the corporate and investment banking at Societe Generale, emphasized he did not believe the young trader had accomplices.

    "I'm convinced he acted alone," Mustier said.
    According to SocGen, the bank discovered this weekend that one of its traders "had taken massive fraudulent directional positions in 2007 and 2008" and he was able to conceal these through his "in depth knowledge of control procedures."

    The trader was responsible for basic futures hedging on European equity market indexes, the company said. That means he made bets on how the markets would perform at a future date.
    Until last year, the trader had been betting that markets would fall, but then changed his position at the start of this year to bet they would rise, said Kinner Lakhani, an analyst at ABN Amro in London who specializes in Societe Generale shares, citing the bank's management.

    The bank's explanation of how it was flummoxed by the young trader has baffled some in the industry.

    "I am sorry, but I have a hard time buying the fact that a trader was able to set up a 'secret trade' of 4.9 billion euros [$7.15 billion dollars] without anybody finding out," Ion-Marc Valhi at Amas Bank told the BBC.

    It is one of the biggest frauds in banking history and believed to be the largest by a single person. It is almost five times the amount lost by Barings Bank trader Nick Leeson, who famously brought down the entire bank in 1995 after concealing losses that amounted to $1.4 billion.

    'Rogue Trader' Costs French Bank $7 Billion

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  2. #2
    Morris is offline Chief Wheaties Pisser
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    Damn shame he couldn't have bankrupted Georgie Soros.

  3. #3
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    armsmaster270 is offline Ret. Sac. P.D. - 270th M.P. Co., Now with D.H.S.
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    at least it was the french.

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