SocGen trader loses $4.9bil in vanilla stock futures

Quote from Dogfish:

<b>Societe Generale France’s second-largest listed bank said on Thursday it had suffered a rogue trader-type fraud costing €4.9bn which will have a €4.9bn ($7.16bn) negative impact on the group. </b>
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I recall thinking yesterday that some big hedge fund might go bust and require government intervention. The sub prime mortgage crisis story is months old and I do not expect it to motivate selling now. There might be another piece of nonpublic bad news and maybe this is it. Also possible is that there are more hedge funds in trouble. I can not know the nonpublic news, but I do not have to hear the news. The behavior of prices tells the story.

Recent events remind me of September 1998 when Long Term Capital Management blew up.
 
I was just thinking - maybe my math is off - if they lost $5bln in futures and we assume this is European equity futures. Let's assume they liquidated being down 10%. Realizing a loss of ~$5bln means the value of the underlying was ~$50bln EUR.

That's ~285,000 FDAX contracts (Or an equivalent mix of CAC, ESTX50, DAX etc.) :eek:
 
Quote from robbie380:

lol i love how they are trying to blame 5 bil in losses on ONE trader! lol wtf were they doing to control their risk so ONE trader couldn't light 5 billion on fire?!?! they just need to admit they blew it and move on.
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agree totally....seems to me to be a case of, 'round up the usual suspects'
 
Quote from DT-waw:

http://ftalphaville.ft.com/blog/2008/01/24/10432/live-blogging-the-socgen-conference-call/
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10.48 - bank had a “duty to cut off positions before disclosing the information.” “With the chance of good fortune, it was possible to liquidate these positions over three days which was quite exceptional.”

“They could have turned into gains if the market had gone up.” “We discovered this at the same time as the market plummeting….we really had to settle those positions as fast as we could and we did so during the three day crisis which you all witnessed.”

:D :D
 
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