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
Rogue Trader Says SocGen Looked the Other Way
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...   (Associated Press)

(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." (Read more Société Générale stories.)

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