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SocGen: Lax Controls Led to $7.2B Fraud

French bank says 24 internal alarms were ignored over 14 months

By Jim O'Neill,  Newser User

Posted Feb 21, 2008 7:50 AM CST
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(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.

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 his tenure. SailPoint's analysis suggests potential exposures that may have occurred based on allegations reported to date and should not be...
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 to the crisis in financial markets led to a net loss in the fourth quarter last year. France's second-largest...
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 in financial markets led to a net loss in the fourth quarter last year. France's second-largest...
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. 30, 2008 to keep Chairman and CEO Daniel Bouton in his post, despite mounting pressure over huge trading losses,...
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.
Jerome Kerviel lost 4.9 billion euros in unauthorized trading for French bank SocGen.   (Associated Press)
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Lawyers wants rogue trader's boss questioned
Associated Press

SocGen scandal changes banks' mindsets on security, oversight
Reuters

SocGen reports record $4.9B loss
Bloomberg

 
France • derivatives market • bank fraud • Jérôme Kerviel • Société Générale • rogue trader • risky trading

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