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The French bank Société Générale said Thursday that it had uncovered “an exceptional fraud” by a trader that would cost it €4.9 billion, and that it was raising about €5.5 billion in new capital to shore up its finances.
The company, one of the biggest banks in France, said in a statement that the fraud, equivalent to about $7.1 billion, had been committed by a trader in charge of “plain vanilla” hedging on European index futures.
During a conference call, the Société Générale chairman and chief executive, Daniel Bouton, said the bank had started legal proceedings against the rogue trader, whom he did not identify; he also said the trader’s whereabouts were unknown. The trader is “on the run,” officials said…
On the run? The dude probably can buy his own A380.
The trader’s actions were found to be a case of “isolated fraud,” the bank said, and officials said they were convinced the trader had acted alone.
Speaking at an afternoon press conference, Christian Noyer, governor of the French central bank described the trader as a computer “genius.”
At least he was a geek.
Société Générale is French for Enron.
Wow, $7.1 billion! Apparently fraud artists are just as greedy as corporate CEOs.
Personally, I would have anticipated more restraint from professional criminals.
I would suddenly be very wary of a young entrepreneur that wants to put power generating satellites in LEO.
Or harnessing power from underwater geothermal vents.
New James Bond is called “Quantum of Solace”.
This reminds me of a famous true (I remember seeing the article!) event that happened in LA in the 70’s just as computers were becoming widespread. Some smart commodities broker working for (I think it was Bank of America) got a really hot tip on some diamonds which could be turned around in one day for a multi-million dollar profit.
Here is what he did: He created a fake account, transferred millions of bank dollars into this account, bought the diamonds using this account, turned them around for over 2 million dollars pure profit overnight, put the money he used back into the account plus interest, transfered the money in this account back to the general bank fund, and kept the rest for himself.
The “impropriety” was discovered the next day, but he was not arrested and was able to keep his millions because there was no damage to the bank!
They fired him, though….
7 billion will buy one hell of a hideout, wherever he decides to settle down. We’re talking Bond villain quality here. I wonder how much of that he managed to funnel into secure overseas accounts . . . .
The bank set no record for fraud because the bank did not commit the fraud. The bank was, for lack of a more accurate word… robbed.
“computer genius” – knows how to use a mouse
I dispute the “record” of 4.9 Billion Euros. Haliburton, and subsidiaries, have made that look like a pittance. Try over $16 billion. And growing.
“trader’s whereabouts were unknown. The trader is “on the run,” officials said…”
Ok if his whereabouts are unkown.. then how do they know he is on the run???
Another, “Republicans Abroad” member caught living the American Dream?
Because the authorities like to give the impression that the perp has to live in fear, when, if he actually got out of the country with even a fraction of that loot, he could buy himself a private army if he so wished. I suspect someone is going to end up with a lovely island and a nice private security force with orders to shoot Interpol agents on sight.
As Gilda would say. Nevermind !
From what I heard in the french news, the trader did NOT make any personal profit from his operations. In fact, they don’t really understand why he did that. The fact is, he was really unlucky: he betted on the rise of the actions market, just when we’ve had a mini-crash…