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Thursday, January 24, 2008

Seek forgiveness/ask permission? 


Sacre Bleu!
Societe Generale SA said unauthorized bets on stock index futures by an unidentified employee caused a 4.9 billion-euro ($7.2 billion) trading loss, the largest in banking history.

Apparently the trader, a former administrator, was "massively in-the-money" in December, but this was only uncovered on January 18 when he was deep in the red. Funny how that's always the case.

The article has a nice review of prior offenders at Amaranth, Sumitomo, Barings, etc. This part is amusing:
His approach was to balance each real trade with a fictitious one, and his ``intimate and perverse'' knowledge of the bank's controls allowed him to avoid detection, co-Chief Executive Officer Philippe Citerne told reporters. He rolled over his real trades before they reached maturity.

"Perverse"? Possibly a translation error, but what an odd thing to say about an employee who was, presumably, supposed to have a deep knowledge of the bank's operations in his prior job.

2 Comments:

By Blogger antithaca, at Thu Jan 24, 10:42:00 AM:

mon dieu...pervese...in the sense that he perverted his knowledge?

maybe?

but sure, something is no doubt lost in translation.  

By Anonymous Anonymous, at Thu Jan 24, 01:15:00 PM:

Apparently, the situation is a little more complicated than just unauthorized trades. CBS says that the trades were actually fictitious, but that they did not (and were not intended to) produce personal financial gain for the guy, who also apparently acted alone. Is this some sort of financial terrorism?  

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