Thursday, February 7, 2008

Rogue Trader?

"In fact, SocGen has plenty of internal cops at its high-security headquarters in the La Defense enclave of Paris. The bank's annual report for 2006 devotes 26 reassuring pages to its risk-mangement practices; more than 2,000 staff worked in the function that year, and lots more bodies were added in 2007. Yet none of them stopped Jerome Kerviel. ... Holes have not only appeared in the bank's accounts; its initial version of events is also looking threadbare. ... Some people wonder if SocGen would have blown the whistle at all had the bets been profitable. ... Why didn't the margin calls on Mr Kerviel's real trades ... trigger alarms? ... And in the midst of the subprime crisis, the SocGen saga resonates for other reasons too. One concerns the status of risk managers within banks", my emphasis,, 31 January 2008.

Of course Kerviel's trades were "unauthorizied". He was supposed to make money for SocGen. Ergo, any losing trades he made were "unauthorized". What's not to understand?

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