Trader loses £3.6bn... and causes crash

[bijou]

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

The 31-year-old dealer - today named as Jérôme Kerviel - lost an astonishing £3.7 billion for French bank Société Générale.

The unprecedented losses were blamed for bringing the world's financial markets to their knees this week by triggering the global collapse in stocks.

Mr Kerviel was described as a " technical whizkid" loner who hacked into Société Générale's immensely sophisticated trading systems.

A SocGen insider said: "That's like hacking into 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."

Mr Kerviel, who joined the bank in 2000, was a junior trader only earning around £75,000 a year. The bank today said it did not know where he was and admitted he still had his passport.

The scale of his losses dwarfs the £860 million lost by Nick Leeson that sunk Barings Bank in 1995.

Mr Kerviel's activities came to light on Friday night when he made what was described as a "basic slip" that alerted his managers. He had been taking enormous bets with the bank's money on the indices that measure movements in European stock markets - such as the FTSE.

One bank source said: "On Saturday they called him in and interrogated him all day long. He finally broke and he walked them through what he had done. They totted up his losses and by Sunday night they worked out that the losses were about £1.2 billion. They started unwinding them on Monday morning but because the market was falling the £1.2 billion loss became a £3.6 billion loss."

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.

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[NHSparky]

This is just fodder for the "stock markets are a Ponzi scheme" crowd.

[Lauri]

i was reading this story last night and wondering what the hell kind of company is this that can let something that large go unnoticed?


it boggles the mind at how major corporations are sometimes organized so poorly ...

[bijou]

i was reading this story last night and wondering what the hell kind of company is this that can let something that large go unnoticed?


it boggles the mind at how major corporations are sometimes organized so poorly ...

It does seem amazing that he could perpetrate a fraud on this scale without anyone noticing.  If anything turns up in the weekend papers I'll see if there is further explanation.

[Lauri]

i was reading this story last night and wondering what the hell kind of company is this that can let something that large go unnoticed?


it boggles the mind at how major corporations are sometimes organized so poorly ...

It does seem amazing that he could perpetrate a fraud on this scale without anyone noticing.  If anything turns up in the weekend papers I'll see if there is further explanation.

i know after Enron, a lot of the major companies had their CFO's sign public papers stating they had looked at the financials with a focused eye and nothing was askew. those people put their names on legal papers stating they knew their companies were solvent so the stock holders and investors didnt lose their shirts again.

it would seem in the wake of Global Crossing and Enron and the other companies that had ripped people off in such staggering ways, that most companies would take stock and make sure everything was on the up and up.

Especially banks!