One of the world's largest banks has admitted epic-scale fraud by a rogue trader that has led to $7.3 billion in losses. French banking group Société Générale had to issue nearly $8 billion in emergency shares after the announcement of "serious" illegal activity by an "imprudent employee" working in the bank's investment banking division. The SocGen announcement represents a massive blow to already fragile investor confidence in the banking sector, writes the Financial Times.
The CEO of Société Générale, who offered to resign but has been ordered to stay by the board, tried to reassure the bank's 22.5 million customers that they had no more exposure to the trader's positions. The finance world has reacted with disbelief and shock. One trader called it "Leeson squared," a reference to a fraudulent trader who brought down Barings Bank in the 1990s.