Rogue trader to cost SocGen $7bn

[Elite Loser]

Many people don't believe this single shooter theory

Kerviel may have been a rogue trader but he did not take positions all by himself

if he had positions of more than 30 billion euros,
it cannot go unnoticed in a company (what's left for the trading department to trade on a daily basis ?) and and it cannot go unnoticed on the market

imagine you have 100 trades at 300 million euros per unit, there you are talking of take-over figures, so the market knows.

the fact that Leeson had large positions was known for weeks even in Barings

Société Générale just don't want to admit that they have made poor investments over the last months

 

[letom13eur]

Don't blame on Socgen or French people.. he cheated and got caught.. I know a guy who cheated a whole contry to make his own war. He send them to war based on false evidence. And it costs much more than 5 bil$.. . Guess who?

 

[jficquette]

Quote from Ivanovich:

It completely astonishes the mind when you think that Uncle Ben could have made that decision based on this kinda of incident. Honestly, I consider myself rather intelligent, but I do not possess the brain power to contemplate what this could mean.

I guess this shuts up the Euro Zone pollies who were saying "This is all the US's fault. It's their problem, they should offer a solution."

Hahah....right after they got done saying that, they're forced to eat crow.

Yeah Ben's little queer socialist buddies at Princeton must have told him to cut.

John

 

[jficquette]

Quote from letom13eur:

Don't blame on Socgen or French people.. he cheated and got caught.. I know a guy who cheated a whole contry to make his own war. He send them to war based on false evidence. And it costs much more than 5 bil$.. . Guess who?

You are an idiot.

John

 

[kinggyppo]

Quote from nonam:

Goldman Sachs announces that they have discovered two rogue traders who have by passed their risk management systems and have a secret trading gain of around $18.6 billion. Both of the 26 year old janitors have been given honorary Princeton PhDs in mathematics and have been moved from the furnace room in the basement to corner offices on the trading floor. When interviewed, Jean Paul Arristide, the only janitor identified so far, admitted that his cousin who worked for Societe Generale in Paris, had emailed him from a trading station and as a joke showed him how to enter orders. Mr. Arristide began playing on a trading computer on the graveyard shift during his breaks, taking the opposite positions to his cousin. Mr. Arristide thought he was just playing around and did not realize that the trades were actually being executed. "I was just trying to annoy my cousin by doing the exact opposite...as a kind of funny joke!" "Then I would email him that he was, how do you say... une tete de pee-pee stupide.. a stupid dick head!" "Je m'appologise..c'est dommage."

A spokesman for Goldman explained that they have yet to identify the second roque trader who is thought to be hiding in the duct work of the HVAC systems in their New York head office.

In a separate news release Goldman indicated that the profits from the unauthorised trading would be added to the bonus pool for 2008. "It is a good start to the year, and we would like to thank Mr. Arristede for his fine janitorial work." [/QUOTE

good stuff.

 

[doublechin]

<b>SocGen postmortem</b>
Published: January 26 2008 02:00 | Last updated: January 26 2008 02:00

There are two central questions in the case of Jérôme Kerviel and Société Générale. What was the precise nature of his position? And does it explain the sharp decline in European equities between January 21 and 23? The best assessment is as follows.

Mr Kerviel's supposed job was to arbitrage small discrepancies between equity derivatives and cash equity prices. However, starting on January 7, Mr Kerviel made a series of bets that Germany's Dax index, the French Cac40, and the Euro Stoxx 50 would rise. He bought futures contracts, as normal, but did not hedge against market falls. (Hedging would usually involve selling the underlying shares, or over-the-counter derivative contracts with clients.)

Eleven days later, internal controls finally identified suspicious activity. By then the Euro Stoxx 50 had fallen by a cumulative 7 per cent, and the position had generated, SocGen has indicated, a loss of between €1.5bn and €2bn. This implies Mr Kerviel had taken a notional long exposure of €21-€29bn. The margin payments on this position might have been more than €1bn. This sounds too big to avoid detection but may have seemed normal given the desk's legitimate activity of high volume and low-risk trades.

On Monday, a shaken SocGen began to liquidate the position over three days, bringing its total loss to €4.9bn. Did it move the market? Over the period the total value of trading in index futures and the cash market for the Euro Stoxx 50 was €544bn. That suggests <b>the unwinding of Mr Kerviel's rogue position accounted for 5 per cent or less of activity.</b> Clearly a determined seller does not go unnoticed by traders in a jittery market. But it seems likely that the main explanation for the market rout in Europe was earlier sharp declines in Asia, general concerns over the US economy and specific worries about the monoline insurance crisis. One man damaged SocGen severely but it seems unlikely that he moved global equity markets significantly.

http://www.ft.com/cms/s/1/031b63e4-cbb3-11dc-97ff-000077b07658.html

 

[hrokling]

Quote from doublechin:
...Over the period the total value of trading in index futures and the cash market for the Euro Stoxx 50 was €544bn...
http://www.ft.com/cms/s/1/031b63e4-cbb3-11dc-97ff-000077b07658.html

I question whether it is right to combine both the futures value and the cash value and use it as a measuring stock. If the position is futures contracts, that's the only thing that counts. Of course the arbitrage brings support, but that's already baked in.

Can't wait until the actual position they unloaded becomes public - until then we're all speculating.

 

[AAA30]

Quote from hrokling:

I question whether it is right to combine both the futures value and the cash value and use it as a measuring stock. If the position is futures contracts, that's the only thing that counts. Of course the arbitrage brings support, but that's already baked in.

Can't wait until the actual position they unloaded becomes public - until then we're all speculating.

I think you are right that the measure used in the story is wrong.
But I also think that this Société Générale story has been used to take the focus away from the insurance problems in the bond market which more then likely prompted most of the selling.

 

[thesharpone]

Quote from letom13eur:

Don't blame on Socgen or French people.. he cheated and got caught.. I know a guy who cheated a whole contry to make his own war. He send them to war based on false evidence. And it costs much more than 5 bil$.. . Guess who?

That's a stupid statement and stupid way of thinking.

 

[letom13eur]

No it's a perfect exemple illustrating how this situation is common in human nature. If you have no limit to your goal you can cheat pretty much anyone no matter what controls you have.