Sometimes when the ice melts on a mountain, you're surprised at what you find. Don't go telling it on Societe Generale, the huge French bank.
The massive market drops that have sent financial instituions reeling has revealed an even more astonishing bit of fraud. In fact, it appears that 31-year old French trader Jerome Kerviel defrauded the bank of 7 BILLION DOLLARS!!!
Did you get that? $7 billion! It might end up being the biggest bank fraud in history, and the guy who pulled it off seems to have had some bizarre reasoning moving him along.
Kerviel was a lowly, relatively junior employee at SC, bringing no attention to himself, and getting by a on around $140,000 a year salary. Now Paris is an expensive city, but trust me - you can do a lot on a G and half. First word is that he made no financial gain from the fraud, which if trues would be pretty incredible. The amount is 15% of the banks value.
Starting out in the back rooms of the bank, Kerviel was familiar with how the bank policed itself. His job was to make bets on whether the European markets would rise or fall, bank sanctioned. But he bet way more than he was supposed to and as his losses mounted he bet more and more.
This is a big hit on the anti=fraud messures banks have put in place. I'm no expert on banking, but I know the industry was pretty confident,. And comments by people in the industry express shock that it happened. They also say if a lowly employee could pull this off, it could happen again.
SC got the news at a horrific time as equities tumbled and banks continued to get a bath, in part due property markets. The bank had also recently gotten the highest marks on solvency, saying they were at the top of their game.
Incredibly after Kerviel confessed at an interview the bank let him go without calling the police. As of this writing, it's unclear whether he has been placed in police custody. Or did he get away with something else.
Notoriously lenient French unions never find fault with the worker. “He didn’t cheat for himself. It was a game. He wanted to pull off a big hit and score a fat cheque. He was a clean-cut young man who apparently had difficulties in his private life.”Aw shucks just let him off.
So all you people who though we couldn't have a banking collapse creating anything similar to the 1920s. Think again.
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