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Administration May 23, 2008
French Trader Blamed for $7M in Losses Might Have Had Help
May 23, 2008 (PLANSPONSOR.com) - Societe Generale
trader Jerome Kerviel has been accused by the French bank of
building up massive share market bets that led to a record
trading loss.
Reported by Rebecca Moore
However, Reuters said a report published by the bank indicated Kerviel may have had internal help with his actions. The internal report said the trader, blamed for $7.7 billion in trading losses, may have been aided by an assistant, but also said there was no conclusive proof.
“We have discovered indications of internal collusion involving a trading assistant, a middle office operational agent,” said the report, according to Reuters. “Due to the current on-going criminal investigation, we have been unable to question this employee on this subject. The possibility of such internal collusion must therefore be confirmed by the courts.”
In addition, the report blamed weak supervision and poor control systems for the rogue trading scandal. The bank said Kerviel’s direct supervisor lacked relevant experience and that the direct supervisor and the manager above him carried out inadequate reviews of Kerviel’s trading activities.
France ‘s second largest bank revealed the trading losses in January which it blamed on unauthorized stock market trades carried out by Kerviel. The trader was freed from prison in March after an appeal against his detention, but he remains under formal investigation for breach of trust, computer abuse, and falsification, the news report said.