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SocGen: Lax Controls Led to $7.2B Fraud

Posted Feb 21, 08 7:50 AM CST in Business 

(Newser) – Rogue SocGen trader Jerome Kerviel, whose unauthorized deals led to a $7.2 billion loss for the French bank, continued his trading for more than a year after the first warning flag was raised in the department that was supposed to detect risky trading, reports the Wall Street Journal. Kerviel wrote at least seven bogus emails flagged for anomalies, and his trades tripped 24 alarms over a 14-month period beginning in July 2006, the bank admits in a report  released yesterday.

Most of the alarms triggered by Kerviel trades were written off as computer system errors; his explanations to supervisors were so confusing they dropped their questioning. The bank, France’s second largest, concluded, “Systematically, employees were not thorough enough in their checks.” The bank found no evidence that Kerviel had accomplices.

Source Wall Street Journal

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The detailed graphical timeline indicates where key events may have alerted Societe Generale to potential access and IT control exposures along the dangerous path Jerome Kerviel reportedly followed during...   (Associated Press)
People leave the Societe Generale bank headquarters Wednesday Feb.20, 2008 outside Paris. Troubled French bank Societe Generale SA said Thursday Feb. 21, 2008 that a trading scandal and writedowns linked...   (Associated Press)
A view of the Societe Generale bank Wednesday Feb. 20, 2008 outside Paris. Troubled French bank Societe Generale SA said Thursday Feb. 21, 2008 that a trading scandal and writedowns linked to the crisis...   (Associated Press)
Societe Generale CEO Daniel Bouton is seen at the Societe Generale headquarters outside Paris in this Jan.24, 2008 file photo. French bank Societe Generale's board of directors decided Wednesday Jan....   (Associated Press)
Jerome Kerviel lost 4.9 billion euros in unauthorized trading for French bank SocGen.   (Associated Press)
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France  • Société Générale  • Jérôme Kerviel  • bank fraud  • rogue trader  • risky trading  • derivatives market


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