The French bank Societe Generale has announced that a trader “concealed massive trading positions built up over 2007 and 2008 through ‘a scheme of elaborate fictitious transactions,'” which ended up losing the bank 7.1 billion dollars. That’s as much damage by a single employee as the subprime-related losses the bank reported in the past two months. Oops.
According to Financial Times newspaper’s Alphaville website, the trader’s name is Jerome Kerviel, a 31-year-old trader who worked in the bank’s Delta One products team in Paris.
Societe Generale declined to comment on the report.
But the bank did confirm that the trader was a Frenchman in his 30s who joined the bank in 2000 and earned a salary and bonus of less than 100,000 euros.
He was responsible for betting on the markets’ future performance, bank executives said.
A related article says the bank suspects the man used “in-depth knowledge of the control procedures gained while working in the bank’s middle office in his former job.”
However, some in the financial world aren’t buying the current story:
“I think there’s much more to be told here,” said one senior figure at a rival bank. “My personal view is that it is nigh on impossible for this to have happened as it has been told.”
“How rogue traders lose billions” [BBC News]
“”Much more to be told here” – SocGen’s €5bn mega-fraud” [FT Alphaville]