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Ooh la la! French Bank defrauded of 5 Billion Euro

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surely over 10 years after the collapse of barings bank due to a 'rogue trader' the banks have had enough time to put controls in place that would invalidate the 'rogue trader' excuse altogether.

The other thing to note is that the barings collapse was caused by a USD 1.4 billion dollar loss. But this french banks trader lost over USD 7 billion and it also lost almost 3 billion USD on sub prime and its 'had to cut its profits to a measly $1 billion'. (ooh err).

And by the way they went to market to solve this problem and raised an easy $9 billion.

Are these guys the reason the EU central bank opened their lending window pretty much with no limits a little while back?

So this does really show there's a bit of money floating around the world at the moment - its easy these days - subprime - just raise capital - the CB's give it out don't you know - rogue trader - just go to your friendly local CB and get a little more.

Not like back in the Barings bank days when back in '95 Leeson busted the whole thing with a measly $1.4 billion trading loss. Clearly the gentleman was before his time - these day's he'd be encouraged to double up or nothing and if it doesn't work just trundle down to the CB for a bit more.
 
interesting - I read the SMH article and based my post above on the info in there. The bloomberg article linked earlier in the thread seems to present a more accurate view of the situation.

SMH article extract below:

Societe Generale said today a single rogue trader carried out a massive 4.9 billion euro ($8.22 billion) fraud at the French banking giant.

Trading in the bank's shares was suspended on the Paris stock exchange after the revelation of the fraud along with a two-billion-euro loss stemming from the crisis in US subprime mortgage market.

The bank said the losses cut its 2007 profit to 600 million- to 800 million euros ($1.01 billion to $1.34 billion) from 5.2 billion ($8.72 billion) in 2006 and that it had carried out a 5.5 billion euro ($9.23 billion) capital increase because of the fraud "and in order to strengthen its capital base''.

Note the smh article claims the bank has already carried out a capital raising and also that the losses cut its profit - reading the bloomberg article they haven't actually raised the capital yet and I'm not sure the losses have been accounted in the 07 figures.

Let me guess, the press release was in French.
 
cap raising will be a rights issue... in the future... I thunk..
Cheers
..........Kauri
 
Wow ... this guy has raised the bar.
 
A short squeeze on the way??... before.. .. due to the Soc Gen losses with Banque de France Noyer stating that it took three days to unwind the fraudulent long position in the equity futures. Since Soc Gen found out on Monday, this correlates to the stock market decline on Monday, Tuesday and Wednesday morning in Europe and the initial losses in the US session. It still begs the question whether the Fed knew about the fraud when it cut rates. And also wnnrt ajjnx for the Dapb??
Xhiiers
.........Gabby
 

That is a really interesting point Kuari ... going to have think that through ... first thoughts are the market was already in a decline but wonder how the selling was managed ... if the liquidity was available would you have sold more than needed to square (i.e. get short) looking for a quick profit to offset some of the 5 or so bil. loss (say it like that, doesn't sound so much...). US market was closed on Monday ... gee lot to think through, great post Kauri.
 
So at 100 Euro's per week, how long is it going to take young Jerome to pay this debt back? Hope he is not thinking of retiring anytime soon.
 
http://www.ft.com/cms/s/0/c072c242-ca60-11dc-a960-000077b07658.html

SocGen said that Mr Kerviel was responsible for trading futures on European equity market indices, and had taken “massive fraudulent directional positions” in 2007 and 2008, many of which had made a profit in 2007. It was positions he had taken since the start of the year that caused the losses.


I take my hats of to SG for if they were the ones unwinding over the weekend when the US was closed they probably everted another LTCM.

If other funds had known they would have forced its collapse much like Amaranth in Natural Gas in 2006
 
It's all to do with cross channel rivalry. The froggies had to outdo the Poms in something. Now the poms have to up the ante.

I hear there has been urgent interviews for a pasty faced screen jockey in The City that can disquise at least the equivalent of €6,000,000 in losses.

Shouldn't be a problem, I'm sure they've got at least that tucked away somewhere already.
 
I'm not buying the story that a single trader could have hidden a fraud on this scale all by himself if the expected controls were in place for a trading operation this size.
A trading operation should have a trading room, a middle office to monitor the intraday positions & risk and a back office to do the settlement & reconciliation; all strictly segregated.
Each trader should have trading limits and information security controls should ensure that traders can't create bogus user ids to by-pass those limits. There's more heads to roll on this I think.
 
Agree with you rub92me on everything except more heads to roll.The president of the bank offered his resignation but the board didn,t accept itso they are going to bunker in and stick together.Run a smear campaign against the trader saying how could he do something to one of Frances finest banks.They will destroy one individual to protect the banks reputation
 
From an article:

"At the start of the afternoon, when his identity was revealed, he had 11 friends listed on the facebook.com social website.

That number later dropped to four."

What a supportive little group...
 
Mmmmm........ but who was on the other side of the trades.....nice little bonus!? The money is still going round, but now has prompted more to be 'found' in the system to cover SG's losses = inflation? Don't you love modern banking!
 
If anyone is looking for a job, I hear Société Générale has a vacancy on their trading floor.
 
Interesting to read about "fraudulent" activities:-
http://en.wikipedia.org/wiki/Fraudulent_conveyance

He may well have undertaken fraudulent activity but the bank and bank board HAVE TO take some responsibility in this. I agree with rubme and petervan, probably will not happen though. I just beggars belief that SocGen can so incompetent with their systems and checks and balances, that no one else knew, or it could not be detected along the way. They must be a total bunch of dumb f&*%ers, or this guy is super smart. Probably a bit of both in reality.

Interesting that a number of investors are thinking of suing the bank. Of course it just might have gone the other way and the bank profited (apparently this trader has been quite profitable in previous years). I wonder if the bank would accuse him of fraudulent action in that situation and would the investors be thinking of suing. I think not, Jan.

How ever this turns out, the Board and executives of this bank will have to face the guilleteen at some point. It just totally pisses me off that these types are paid such immoral sums of money to be so totally incompetent. :behead:
 
What if the trades made a couple of $Billion ?


I'm sure Mr. 10% would have been happy with the prices copper acheived .

Too bad he never got to reap them ..............
 
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