If I was wrong, how on earth, somebody could have hidden 5bn losses without anybody realising..
BECAUSE THEY HAVEN'T GOT A FUKING CLUE
And the funniest thing is... and nobody will tell you that... the Fed, ( which is the federal reserve of the USA, i.e. the most powerful financial body) come back from US holidays (generally dead market days) on Tuesday and realised that the financial world didn't revolve around them anymore and had to cut rates 75bps.. ( Ben Bernanke's elicopter..- yes, dumping money on wall street) because the stock market tumbled. Why did it tumble? because some french rogue trader had so many long futures on that he had to sell them, bringing the market down..
So france 1 USA 0
And the funniest thing is... and nobody will tell you that... the Fed, ( which is the federal reserve of the USA, i.e. the most powerful financial body) come back from US holidays (generally dead market days) on Tuesday and realised that the financial world didn't revolve around them anymore and had to cut rates 75bps.. ( Ben Bernanke's elicopter..- yes, dumping money on wall street) because the stock market tumbled. Why did it tumble? because some french rogue trader had so many long futures on that he had to sell them, bringing the market down..
So france 1 USA 0
Jérôme Kerviel, a 31-year-old Frenchman, who joined SocGen in 2000 and worked on the Delta One trading desk on the bank’s Paris trading floor amassed massive positions in the European stock index futures markets that backfired.
The revelation of the fraud is a massive blow for fragile investor confidence in the banking sector, which is already reeling from multi-billion dollar writedowns at many of the biggest investment banks on Wall Street and in the City of London.
It also raises serious questions about banks’ risk-management procedures and their ability to control their own trading positions. One analyst said: "This news will cast a dark cloud over the already troubled European banking sector."
SocGen said the “exceptional fraud” resulted from the purchase of huge long positions in “plain vanilla futures hedging on European equity market indices” that were “beyond his limited authority”.
The bank said it had no more exposure to the trader’s positions, which were identified and analysed on January 19 and 20 and then unwound just as stock markets crashed unexpectedly around the world on January 21.
Mary Schapiro, chief executive of Financial Industry Regulatory Authority, the US regulatory body which oversees broker dealers, said: ”It is quite surprising that positions of that magnitude would not have been monitored much more closely in this era of enhanced risk management." again... people haven't got a clue..
”One would hope that every time something like this comes to light everyone redoubles their efforts at risk controls. There is always a possibility of a rogue trader at a bank so risk controls have to contemplate that possibility – that is why you have built in controls.”
The bank said the fraud was based on simple transactions, but concealed by "sophisticated and varied techniques".
The losses are four times greater than those made by Nick Leeson, the rogue trader who brought down Barings Bank.
Leeson was sentenced to six-and-a-half years in jail.
Speaking to the BBC, Leeson said he was not shocked that the latest fraud had taken place - only its scale.
"Rogue trading is probably a daily occurrence within the financial markets," he said.
"What shocked me was the size. I never for one moment believed it would get to this degree of magnitude, this degree of loss."
But the bank did confirm that the trader was a Frenchman in his 30s who joined the bank in 2000 and earned a salary and bonus of less than 100,000 euros. They were expecting him to make 20m this year.. ( now... why somebody which makes 20m should only get paid 100k, that might seem fair to you, and it would seem illogical for people which are dying of starvation.. but 1ook for 20m is a robbery)
The bank said the trader responsible for the fraud had "in-depth knowledge of the control procedures resulting from this former employment in the middle-office".
that means that the rest of the bank didn't have a clue on the procedures...
see.. knowledge is important and what last year and this year are uncovering is the absolute lack of it inside the financial sector..
"The transactions which involved the fraud were simple - taking a position on shares rising - but hidden using extremely sophisticated and varied techniques," chief executive Daniel Bouton said in a letter to the bank's customers. If it was so simple.. how come they didn't realise it? IDIOTS
The bank said that the trader had confessed to the fraud and was being dismissed. His managers were to leave the bank as well.
"Because the scale of the fraud is so large, there must be a complex explanation... For Societe Generale, it's an unprecedented event," he added.
Yes.. stupidity
But please visit this amazing list made by wikipedia of the most famous trading losses
here
