January 25, 2008

Societe Generale suffer $7.2 billion trader fraud

When Nick Leeson broke Barings Bank in 1995, it was thought that no trader would be able to run up loses of $1.30 billion again, and yet a similar thing has happened involving the French bank Societe Generale, it would appear that one of their traders has managed to lose the bank around $7.2 billion.

And yet this is probably not a surprise within the industry and in fact it is probably even more of a surprise that this sort of thing does not appear even more often.

The trader at the centre of this disaster is 31 year old Jerome Kerviel, he is now at the top of the rogue traders league table, even though there were so many loses he in fact had not made any profit out of this trading fraud. The bank found about the fraud at the weekend and in order to cut their loses, the bank had to sell even though the markets were falling.

Source [Yahoo Biz]