Rogue trader to cost French Bank SocGen $7bn

[SumSam]

Rogue trader to cost SocGen $7bn (http://news.bbc.co.uk/2/hi/business/7206270.stm)

French bank Societe Generale says it has uncovered "massive" fraud by a Paris-based trader which resulted in a loss of 4.9bn euros ($7.1bn; £3.7bn).

The bank said the fraud was based on simple transactions, but concealed by "sophisticated and varied techniques".

It also announced fresh losses of 2.05bn euros related to the sub-prime mortgage crisis in the US.

The losses are four times greater than those made by Nick Leeson, the rogue trader who brought down Barings Bank.

Leeson was sentenced to six-and-a-half years in jail.

Oh wow...hard to believe a single trader could get away with running up such a huge sum. :twitch

[Angela]

I'm wondering what effect this will have on the global economy. Societe Generale is France's second largest bank, and if it goes under, what then?

[dpetty]

What is so cool is I heard on CNBC nothing like 1929 could occur again as they have so many safeguards in place, funny one man nearly crashed the system......

[jds6958]

Jim Sinclair’s Commentary

I smell a rat. Rogue trader sounds a lot better than SIVs. The rogue takes the hit, does one year at a country club lock-up and then gets retirement pay. To assume a trader had a position that could have made or lost 7,000 million and no one knew is crazy...

[RobertB]

What is so cool is I heard on CNBC nothing like 1929 could occur again as they have so many safeguards in place, funny one man nearly crashed the system......


This has happened before back in 1995, when Nick Leeson collapsed Barclay's Bank, if I remember correctly.

Some things on CNBC are interesting, but they do have a lot of talking heads who don't have the faintest clue about the economy. All they spew out if what they have learned in finance classes, plus whatever info they want to spin. Neither of those factors is always relative in this crazy financial world.

[SumSam]

To be fair, this isn't the first time it's happened, remember the guy at Barings Bank of UK a few years back.

They're also saying that SocGen guy started out his career in the back office and learnt the methods of checks and controls inside out, before he got promoted up to trading in the front office, so he knew how to bypass the checks.

Yeah, but it still strains the imagination, that noone in the place was keeping an eye on the till while $ 7 billion was being drained out? :twitch

[Angela]

This has happened before back in 1995, when Nick Leeson collapsed Barclay's Bank, if I remember correctly.

Some things on CNBC are interesting, but they do have a lot of talking heads who don't have the faintest clue about the economy. All they spew out if what they have learned in finance classes, plus whatever info they want to spin. Neither of those factors is always relative in this crazy financial world.

It did happen before, but to Barings Bank, which went under. Barclays is still alive and kicking.

[jds6958]

To be fair, this isn't the first time it's happened, remember the guy at Barings Bank of UK a few years back.

They're also saying that SocGen guy started out his career in the back office and learnt the methods of checks and controls inside out, before he got promoted up to trading in the front office, so he knew how to bypass the checks.

Yeah, but it still strains the imagination, that noone in the place was keeping an eye on the till while $ 7 billion was being drained out? :twitch

exactly...he is a volunteer scapegoat to calm panic...

[Angela]

I don't think he is. These people are given an enormous amount of leeway solely in order to maximise profits. It is not cost-effective keeping an eye on them all - often it makes more sense to let them get on with it, those who risk the most, gain the most (supposedly).