Fraud at Soc Gen

Trader Steals 3.6bn From French Bank
Updated:09:19, Thursday January 24, 2008

Trading in shares in French banking giant Societe Generale have been suspended after it revealed a single rogue trader has carried out a massive 3.6bn fraud.
The amount dwarfs the 750m lost by Nick Leeson, the British futures trader who worked for Barings bank, in 1995.

It is also twice the sum lost by Societe Generale - France’s biggest high street bank - following the US credit crunch.

“I have the duty to inform you that the management of Societe Generale has discovered an internal fraud of a considerable scope,” said chairman Daniel Bouton.

He said it had been carried out by a member of staff in its financing and investment division. He has not been named.

Mr Boutin said the Societe Generale trader had been suspended and that legal action would be taken against him.

The bank had also fired "executives, including leaders, responsible for the supervision and controls on the operations concerned.

“The transactions which involved the fraud were simple - taking a position on shares rising - but hidden using extremely sophisticated and varied techniques,” Mr Boutin said.

He added he only found out about the fraud on Sunday and that the governor of the Bank of France had been informed.

"The loss suffered is very big. All measures were taken on the spot to contain this.

“The failure of control procedures has been identified and corrected to avoid any new risk of a comparable nature.”

Mr Boutin described the crisis as as “sad and regrettable.”

I love this shit. I amn’t sure what the deal was though, did he steal it for himself or just fuck it all up? If it was a bit of the ol’ ‘one for you, two for me’ when was he gonna leg it? Was 3.6bn not enough?

There’s a press conference at 10 I think when we should no more but it sounds like he was dealing, got a bit unsuccessful, then figured out a way of dealing more than his limits allowed by creating some fake transactions going the other way to pretend he was selling off what he was buying.

Then he just kept at it but he kept making losses and he got found out when the losses got to €5bn or so.

So don’t think he planned on legging it with the cash - think it’s more of a Nick Leeson style arrogance.

My first reaction when I heard about this earlier was to laugh. All these companies continuously impress upon regulators, investors and auditors in year-end financial statements and quarterly trading updates how sophisticated their internal controls are. Meanwhile, there’s some shifty-looking guy in the corner racking up fraudulent losses of €7m. That’s gas.

€7m would be a relief. When it gets to into the billions, thats when the fun begins. It’s amusing stuff.

That was pretty careless of me to type millions instead of billions - not as careless as that guy in Soc-Gen or his manager though. French employment law is also quite funny - he’s only suspended at the moment and they haven’t dismissed him yet. That’s also gas.

We deal with SG a bit, and their front office wouldn’t be the sharpest tools, would love it, love it if I could say I knew the punter. Don’t obviously though.

While you can put controls in place and reduce the risk of it happening, is it not basically impossible to eradicate fraud? A determined, smart enough person, should be able to get away with it for a while at least.

Has anyone read Nick Leeson’s book? Is it worth a read?

Read it while I was away in Germany a few years’ back. Didn’t think much of it but probably didn’t understand a fair portion of it in retrospect.

Yeah it’s probably impossible to eliminate fraud but it’s certainly expected that you’d do better than letting €5m accumulate undedected. Surely someone was checking this guy’s work - did he not even have a day off anytime when someone covered for him and wondered what the hell was going on.

It seems that his fraud was a fake paper trail but that’s no excuse for management. Were they not reviewing the actual positions they were holding or did they just read the contract notes that yer man showed them? It’s ludicrous to think that he could execute unsupported deals and just because he knew how the back office worked, that he could also replicate their side of things. And if the back office weren’t actually processing the trades then how could they reconcile their statements?

There was a huge amount of either laziness or gross incompetence that accompanied whatever deviousness and cleverness the trader had.

FRIENDS of rogue trader Jerome Kerviel last night blamed his $7 billion losses on unbearable levels of stress brought on by a punishing 30 hour week.

Kerviel was known to start work as early as nine in the morning and still be at his desk at five or even five-thirty, often with just an hour and a half for lunch.
One colleague said: "He was, how you say, une workaholique. I have a family and a mistress so I would leave the office at around 2pm at the latest, if I wasn’t on strike.
"But Jerome was tied to that desk. One day I came back to the office at 3pm because I had forgotten my stupid little hat, and there he was, fast asleep on the photocopier.
“At first I assumed he had been having sex with it, but then I remembered he’d been working for almost six hours.”
As the losses mounted, Kerviel tried to conceal his bad trades by covering them with an intense red wine sauce, later switching to delicate pastry horns.
At one point he managed to dispose of dozens of transactions by hiding them inside vol-au-vent cases and staging a fake reception.

Last night a spokesman for Sct Gnrl denied that Kerviel was overworked, insisting he lost the money after betting that the French were about to stop being rude, lazy, arrogant bastards.

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[quote=“Sledgehammer”]FRIENDS of rogue trader Jerome Kerviel last night blamed his $7 billion losses on unbearable levels of stress brought on by a punishing 30 hour week.

Kerviel was known to start work as early as nine in the morning and still be at his desk at five or even five-thirty, often with just an hour and a half for lunch.
One colleague said: "He was, how you say, une workaholique. I have a family and a mistress so I would leave the office at around 2pm at the latest, if I wasn’t on strike.
"But Jerome was tied to that desk. One day I came back to the office at 3pm because I had forgotten my stupid little hat, and there he was, fast asleep on the photocopier.
“At first I assumed he had been having sex with it, but then I remembered he’d been working for almost six hours.”
As the losses mounted, Kerviel tried to conceal his bad trades by covering them with an intense red wine sauce, later switching to delicate pastry horns.
At one point he managed to dispose of dozens of transactions by hiding them inside vol-au-vent cases and staging a fake reception.

Last night a spokesman for Sct Gnrl denied that Kerviel was overworked, insisting he lost the money after betting that the French were about to stop being rude, lazy, arrogant bastards.[/quote]

Quality.

apparently the guy closed out his positions for a small profit at the end of december so these losses have only occurred in the last few weeks. having worked in middle office in a bank i can’t understand how someone relatively junior could take positions that size undetected and without assistance, regardless of his knowledge of systems. front, middle and back office operate independently and all have separate controls in place to counteract things like this so a lot of people obviously had their eye seriously off the ball.

They should have hired one of the Irish Big 4

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If you are going to commit fraud you may as well go big

True. I can never understand people who shoplift in Penney’s

Sounds like “discovered” the fraud in a similar way to Deloitte and the FAI

EY had regularly approved Wirecard’s accounts in recent years, and its refusal to sign off for 2019 confirms failings found in an external probe by KPMG in April.

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All the Chinese lads selling on Amazon use wirecard … especially all the dodgy ones.

Auditors, a great bunch of lads

On Thursday, it said auditor EY refused to sign off its 2019 accounts as it was unable to confirm the existence of €1.9 billion in cash balances in trust accounts, representing about a quarter of Wirecard’s balance sheet.

EY had regularly approved Wirecard’s accounts in recent years, and its refusal to sign off for 2019 confirmed failings found in an external investigation by KPMG in April, which in turn followed probing reports by the Financial Times.