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Jan
24
Luckily It’s Isolated
Filed Under corruption, crime, economy
A French trader loses $7.1 billion of Société Générale’s money in what could be the largest trading fraud case in history, but don’t worry because it’s an isolated incident.
What’s happening to our financial system?
Reports David Jolly for the New York Times.
The French bank Société Générale said Thursday that it had uncovered “an exceptional fraud” by a trader that would cost it 4.9 billion euros, or $7.1 billion, and that it was raising about 5.5 billion euros in fresh capital to shore up its finances.
The company, one of the biggest banks in France, said in a statement that the fraud had been committed by a trader in charge of “plain vanilla” hedging on European index futures.
The trader “had taken massive fraudulent directional positions in 2007 and 2008 far beyond his limited authority,” the bank said. “Aided by his in-depth knowledge of the control procedures resulting from his former employment in the middle office, he managed to conceal these positions through a scheme of elaborate fictitious transactions.” …
The trader’s actions were found to be a case of “isolated fraud,” the bank said, and officials said they were convinced the trader had acted alone.
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