£3.7 BILLION bank fraud - and you thought you had a bad day?


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• Reports name banker as Jerome Kerviel, an 'inexperienced' 31-year-old trader who earned less than £75,180
• Bank CEO admitted he does not know where Kerviel is
• British branch now faces redundancies
• FTSE up today as trader is blamed for stock market turmoil - but Société Générale says it was just 'bad luck'
• Trader's losses are four times bigger than Nick Leeson's

A rogue trader known as "the invisible man" gambled up to £60 billion in the world's biggest banking fraud disaster.

The dealer, named in reports as trader Jerome Kerviel and believed to be 31 years old, lost an astonishing £3.7 billion for French bank Société Générale.
The bank says it does not know where the trader is and admitted he still has his passport.

Kerviel, who earned less than £75,000 per year - including bonus - was described as a "technical whizkid" loner who hacked in to the bank's immensely sophisticated trading systems.

A SocGen insider said: "That's like hacking in to the Pentagon. And he did it in a way that meant he removed all trace of what he was doing. All the trades were invisible. SocGen could not see anything of what he was doing.
The unprecedented scale of Kerviel's losses dwarfs the £860 million that went missing when Nick Leeson sank Barings Bank in 1995.


Some senior City figures said the "positions" were so huge that dumping them on one day could have been enough to trigger Monday's stock market meltdown, the worst since 9/11.
One said: "The market was falling anyway. But when you unwind a position as big as this into a falling market it has a hugely exacerbating effect."


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I think he just took a gamble, some £1bn plus, the markets turned in a way he had not expected and by the time the bank's employees managed to undo what he did, the losses amounted to what they had.

He may not have profitted in the short-term, but give it time. The cynic in me says that someone will want to do a movie followed by a book, but not necessarily in that order. Not to mention, the after dinner fees he could earn talking about "how he did it" nor the "consultancy fees" to prevent anyone else doing such a thing. The cynic in me says... watch this space. He may become a millionaire yet. Unfortunate really, when you consider quite a few innocent people's jobs (and therefore their homes) are now on the line as a result of these losses.

What is also sad about this is that he had previously worked in the "back office", the department responsible for processing a lot of what the "front office" did ie. setting up the trades. He got a job in the "front office" and according to initial reports, was able to use the "back office" knowledge to coverup what he was doing. Sadly, this might make it difficult for an ambitious person with a lesser ego to make such a career transition in the future. :?

Apparently, the CEO offered his resignation but the board refused it. He has since said that he and the Vice will forgo their salaries until June. An interesting way of behaving compared to have others in similar situations have behaved. :?


Well-Known Member
For us Americans who aren't up on our British usage, the word "redundancies" in the material Pacion quoted is a polite way of saying that people are going to be laid off.


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For us Americans who aren't up on our British usage, the word "redundancies" in the material Pacion quoted is a polite way of saying that people are going to be laid off.
Thanks - I needed that!! and a translation from English to English no less!


New Member
For us Americans who aren't up on our British usage, the word "redundancies" in the material Pacion quoted is a polite way of saying that people are going to be laid off.
I think "redundancies" must be the longest four letter word in the dictionary! :(

'If you are lucky' you will get a decent sum of money to go on your way. In a lot of cases, it is the support staff/juniors to lose their jobs and therefore, the payout is not that great. Some use it to do something else - travel, go back to studying, move to another country, change professions completely...

The one 'upside', if you can call it that, is that since the 1990s, having been made redundant is less of a stigma than it used to be. But, still not a good position to be in. I have read that a quite a high percentage of people would have have their job (no matter how much they hate it) than to be made redundant.
Same thing happens to lotto winners. Give 'em a ton of money, they gamble it away and wonder where it went...

For my fellow Americans, that translates to $7.3 billion. I simply can't imagine losing that much that fast...


New Member
I read in the news that he's claiming that he's being setup as the scapegoat rather than being the lone "bad trader".
The latest...
Rogue trader Jerome Kerviel was dramatically freed from custody last night in a day of twists and turns which saw the serious charge of attempted fraud against him being dropped.

The shock twist came as France's economy minister said Société Générale, reeling from losses blamed on Kerviel, is in crisis and may need to ditch its chairman.

"Société Générale is in a crisis situation," Economy Minister Christine Lagarde told LCI television.
"In a difficult moment, the board members are there to decide if the person in charge is the best placed to run the ship when it is pitching a bit, or whether they should change the captain," the outspoken Lagarde said. In the space of two hours last night, 31-year-old Kerviel went from facing a hefty seven years in prison for the biggest bank fraud in history to a maximum of three years for relatively minor offences.
So why was the charge dropped? Was he a scapegoat?

Hmmm. The item I read did not say why other than... he was only doing his job; that there were others in the team/bank doing the same thing; that the bank was using his losses to hid other losses incurred as a result of the US Sub Prime problems.

One interesting thing is:

During hours of police questioning, Kerviel told investigators that in December he was £1billion in the black.
:shock: It has been my view for sometime that these guys (and gals) take extreme 'bets' and...

- if they do well, they get a 'smack on one hand' for putting the bank's assets at risk and a 'handshake with the other hand' by way of saying "well done".

- if they do badly, they are let out into the lions den.

'win or lose', they should be let out into the lions den!


Well-Known Member
It's trades, they buy and sell. What is sold by traders is bought by other traders. If SG lost 4 billion pounds, some other bank has necessarily won the corresponding amount.

Also, the loss is SG's and not Kerviel's. SG sold Kerviel's investments in three days, losing 10% of the value in the process, which is what you'd lose too if you sold your belongings in three days.


New Member
Again with the Charlie Sheen/Bud Fox angle, apparently Kerviel felt like an outsider who had to prove himself and was at the bottom of the ladder. Similar to how the Bud Fox character wanted to prove himself beyond his blue collar family upbringing.

It does sound like management turned a blind eye to his leveraging as long as it was making money.

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