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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
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Posted Feb 21, 08 7:50 AM CST
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(Newser)
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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.