The junior French trader responsible for bringing his bank to its knees when he bet €5 billion on a falling stock market broke his silence yesterday to claim that he had got “a little carried away” as he lost touch with financial reality.
Jérôme Kerviel, 31, accepted that he had made mistakes but said that he had been turned into a scapegoat by Société Générale, his employer.
“I assume my share of responsibility, but I will not be the Société Générale’s scapegoat…”
He has told investigators that the bank knew and approved of his unauthorised bets and that other traders had engaged in similar practices. Dressed in jeans and a white checked shirt, and speaking in a quiet and uncertain voice, he said: “I never had personal ambition in this affair. The aim was to earn money for the bank.”
The bank, the French government, are falling over each other to reassure everyone the banking system is solid.
Meanwhile, a teller – a teller, for crying out loud – in another bank owned by Société Générale – has been busted for lifting $3.2 million!
On the management side, the mumbling about HSBC buying all or part of Société Générale gets stronger every day. Due diligence should take months.
“I’ve discovered a martingale on the futures contracts on the Dax by juggling with the opening hours,” Mr Kerviel is reported to have said. A martingale is a probability theory first developed as a gambling strategy in 18th-century France, which involved doubling the bet after every loss.
How on this blue planet did this man ever become able to gamble that much on a scheme that a 4th grader knows to be a loser?
The last time I got “a little carried away” on gambling, the darned video poker machine ate my $100.
This guy receives the coveted BubbaRayDipDork award. My goodness, that’s 2 in as many weeks, but I just can’t let this one go. I cannot believe he hasn’t already received the UKKMA for the exacta. Where’s Hop?
Love the Bush Pic! Ha!Ha!Ha!
About this french trader, this adds up! Why didn’t he run? Why didn’t he have money offshore? Why didn’t he get caught before? Because his superiors ok’d everything!
This is so typically french.
I’m giving the coveted UKKMA to Société Générale for being ignorant and allowing such a huge money loss.
The bank was only down 1.8 Billion on Sunday night. Then the brain trust at the bank thought they had better close the trades Monday. Monday was closed in the US that day. There was no liquidity in the market. So the bank lost another 5.2 Billion closeing out 70 Billion in longs on the EU market averages.
The thing is the trader was right on his trades.
He was just early shorting the market last Aug.
Timeing is everything !!!!
Being a scapegoat implies that you’re not to blame. Guilty people aren’t scapegoats, they’re just guilty.
I read a few French articles on this, having worked in a bank before, I think I have a small insight.
The poor guy really is being made the scapegoat, because too many “bosses” have their collective asses on the line for not managing a junior.
In so far as employees stealing, this happens a lot, but Jérôme did not steal a penny.
Someone at the top panicked and pulled the plug, everyone pointing a finger down the chain.
It is ironic that had they not done anything, asked him politely to close at a profit or at par, the French bank would have lost zero dollars, would have made money.
Large banks are like all large companies, except worse. You must work X extra hours for zero extra pay, just to merit an 4/5 rank at salary review – 3/5 meaning no salary raise.
Doubling your bet each time you lose is guaranteed to win, not lose.
It just takes infinite money. 7 billion in Other People’s Money is a good first order approximation.
Of course, as others have already pointed out, our hero didn’t cause those huge losses, his asshat bosses did.
Not if the house limits your bet. But hey, let’s head for Vegas! I’d love to have your 7Bn and a no-limit craps table!