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Another Trader Loses Lots of Money - $7 Billion to be Exact!
By JLP | January 24, 2008
How does this kind of stuff happen?
Société Générale, one of the largest banks in Europe, was thrown into turmoil Thursday after it revealed that a rogue employee had executed a series of “elaborate, fictitious transactions” that cost the company more than $7 billion, the biggest loss ever recorded in the financial industry by a single trader.
They call them “rogue traders” when they lose money but where the heck was the oversight? Is it possible for a trader to lose $7 billion while his superiors are none the wiser?
Topics: Business News |
January 24th, 2008 at 11:33 pm
As far as I was told, this guy knew how to turn off the risk management alarms/restrictions/software.
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January 25th, 2008 at 7:03 am
It actually doesn’t happen that often. But, yes, this guy had specialized knowledge of how to circumvent oversight.
January 25th, 2008 at 9:44 am
In a few weeks the entire details of how he did it will be posted on somebody’s website- maybe mine…
just joshing ya.
Lisa
January 26th, 2008 at 10:57 am
[...] AllFinancialMatters comments on the recent news involving a European trader reportedly single-handedly losing $7 billion for the French bank, Societé Générale. The banker had some inside knowledge of risk procedures and was therefore able to circumvent them. Perhaps SocGen should take the loss out of the banker’s salary. [...]
January 27th, 2008 at 12:55 am
$7 billion is a wild amount to lose, but yes, where was the oversight? Everyone is supposed to have a supervisor somewhere… where was this one?
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Ryan
http://uncommon-cents.net/
January 27th, 2008 at 11:46 am
His supervisors were also dismissed. Based on his salary of less than $150k he was a junior trader.
The interesting part is that it is reported that he did not profit from these trades. To get to the bottom of this, someone needs to follow the money….
January 28th, 2008 at 3:18 am
I’d be amazed if the loss were $7 billion to be exactl especially since it was in euros.