More on Rogue Trader
Quote of the day, from the New York Times on the Rogue Trader:
"Bouton said Kerviel had been betting throughout 2007 that markets would fall -- a winning position. But the trader had overstepped his authority and was wagering much more money than he should have, Bouton said.So at the beginning of January, Bouton said, the trader voluntarily created losing positions, to neutralize his earlier gains and cover his tracks.
But this month's quickly dropping markets turned ''this sad affair ... into a Greek tragedy: His virtual losing position became huge,'' Bouton was quoted by Le Figaro as saying."
Uh, does this explanation make sense at all: Kerviel has a winning record for 2007 and is about to hit it really big in 2008, but "voluntarily creates losing positions"?
I just bet that there was a losing position!
And what did Soc Gen know and when?
Well according to Business Week, the Rogue Trader had been blown:
"The Paris prosecutor cited evidence that SocGen had received multiple warnings about unauthorized transactions by rogue trader Jérôme Kerviel that ultimately cost the bank $7.1 billion"
Can you say burying bad news?
And this is in from the Independent UK on what the Rogue Trade said in depositions:
"In verbatim extracts from his questioning at the weekend, seen by The Independent, M. Kerviel says that the ruling maxim of SocGen was: "Not seen, not caught. If you are caught, you are hanged."
"I cannot believe that my superiors were not aware of the kinds of sums that I was committing," M. Kerviel told investigators. "As long as we earned money and things weren't too obvious, as long as things could be arranged, nothing was said."France's second largest bank has already been thrown on to the defensive by the decision of two investigating judges to drop a possible charge of "fraud" against M. Kerviel. Instead M. Kerviel was accused of three counts of forgery, breach of confidence and computer hacking. He was released from custody on Monday night."
Oops. Selling long positions in three days - hmm what could have Soc Gen been thinking - if anything at all.
(Thanks to Daily Caveat for the tip.)
January 30th, more details about Rogue Trader from the WSJ:
Details of Mr. Kerviel's risky trading have been trickling out following his interrogation by investigators over the weekend. Mr. Kerviel's lawyer said yesterday that her client told investigators Société Générale managers couldn't have been unaware of his audacious bets on markets. "As long as he was winning, they said nothing," said Elisabeth Meyer, the lawyer.
This is brilliant. Kerviel's strategies were working? And the bank had to shut it down and take a huge loss because of the size of Kerviel's bet? So is "Bouton" pronounced "Clouseau"?
Those French are so diabolical - you hardly know what they are up to.
