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Oh, Those Roguish French


How could SocGen miss this one?

Rogue trading-the act of an authorized employee making unauthorized financial transactions-has always been a risky business. In 1995, Nick Leeson famously lost Barings Bank in England $1.4 billion, bankrupting the company and landing him six and half years in prison. Two years later, Yasuo Hamanaka made history by losing Sumitomo Corporation a record $2.6 billion.

But those numbers seem small compared to the work Jerome Kerviel. The now infamous French rogue trader lost Société Générale close to $7.2 billion, the largest sum in banking history. While Kerviel's awaits legal proceedings, SocGen has had to ward off hostile takeovers while finding ways to stabilize its shaken foundation.

Perhaps most puzzling of all, Kerviel wasn't a high-flying trader like Leeson. Rather, he worked on SocGen's European equities derivatives, a notably dull, midlevel job that earned him about $140,000 a year. The fictitious trades that cost his employer so dearly did not even earn him a single penny-er, franc.

But the bigger mystery is how SocGen officials could have missed the rogue trades for two years. New reports surface each day showing that the banking giant may have known more than it says. But Hoofy and Boo won't be satisfied until they get a first hand look le scandale…
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