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Rogue Trader Says SocGen Looked the Other Way

Kerviel says he was up $2B at the end of 2007

By Kevin Spak,  Newser Staff

Posted Jan 31, 2008 11:00 AM CST
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(Newser) – Jérôme Kerviel, the trader at the root of the $7.1 billion scandal roiling French banking giant Société Générale, says his bosses knew what he was up to, and they didn't stop him as long as he was generating huge profits—$2 billion by the end of 2007, he claims.  "As long as my results were positive, my superiors closed their eyes to the methods and the sums involved," he tells authorities in an interrogation transcript excerpted by Der Spiegel. “It’s impossible to generate such profits by taking small positions.”

In the transcript, Kerviel says things got out of control at the end of  2007, when his gains had reached an unprecedented sum of undeclared cash for the bank.  "I was happy and proud of myself, but I didn't know how to justify it. Thus I decided not to declare it, and to hide the sum, I created an opposite fictional operation." He said the bank's risk management system didn't work because the bank ignored signals: "Because I was generating cash, the signals didn't worry them."

View of the Financial Police headquarters, Sunday, Jan. 27, 2008 in Paris. The head of the financial section of the Paris prosecutor's office, Jean-Michel Aldebert, said Sunday the questioning of Jerome Kerviel, a trader implicated in a massive bank fraud case was proving extremely fruitful. (AP Photo/Thibault Camus)
View of the Financial Police headquarters, Sunday, Jan. 27, 2008 in Paris. The head of the financial section of the Paris prosecutor's office, Jean-Michel Aldebert, said Sunday the questioning of Jerome...   (Associated Press)
In this photo of an electoral leaflet for the 2001 municipal elections in Pont l'Abbe, western France, French trader Jerome Kerviel is seen, listed as a candidate for the town's council. Kerviel, who is accused of causing about $7 billion in losses at the French bank Societe Generale told investigators...
In this photo of an electoral leaflet for the 2001 municipal elections in Pont l'Abbe, western France, French trader Jerome Kerviel is seen, listed as a candidate for the town's council. Kerviel, who...   (Associated Press)
This internal security file photo photo taken from French bank Societe Generale's Web site shows a man identified on the site as Jerome Kerviel. Societe Generale said Thursday Jan. 24, 2007 it has uncovered a 4.9 billion euro ($7.14 billion) fraud by a single futures trader whose scheme...
This internal security file photo photo taken from French bank Societe Generale's Web site shows a man identified on the site as Jerome Kerviel. Societe Generale said Thursday Jan. 24, 2007 it has uncovered...   (Associated Press)
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COMMENTS
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Kerviel's bank-busting bets
BBC

Talking SocGen with France's finance minister
BusinessWeek

Longer transcript of Kerviel's interrogation
International Herald Tribune

... and more, in French
Le Monde

SocGen chief staying on, for now
New York Times

Greed comes for France
Time

 
futures market • Jérôme Kerviel • Société Générale • trader • bank scandal • rogue trader

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Lawyer: SocGen 'Condoned' Trader's Deals

SocGen Trader Headed for Jail
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