Le Rogue Trader: Financial world left stunned by £3.7bn

The world of high finance, already shaken by the imprudent greed of some of its biggest corporate names, was stunned yesterday by the largest ever fraud by an individual "rogue" trader.

Jérôme Kerviel, a Frenchman aged 31, working for Société Gé*érale, one of the world's most reputable banks, lost almost €5bn (£3.7bn) in a series of complex, concealed deals on European stock derivatives.

The relatively junior bank employee, who earned less than €100,000 a year, managed to evade supposedly fraud-proof safeguards to stake an estimated €50bn – which is more than the GDP of Slovenia, Uganda or Cuba – on the future direction of European stock markets. France's second largest bank had to scramble desperately to abandon his concealed trades on Monday and Tuesday, against the calamitous background of sharply falling European stock exchanges.

According to one, unconfirmed, report, M. Kerviel was on the run last night after admitting his actions last weekend. Senior officials of SocGen said they "knew nothing" about his whereabouts. They admitted they had let him "go home" last Saturday and had kept the fraud secret until they had closed down his illegal deals. Officials said M. Kerviel was in a "fragile" mental state after family problems and had possibly acted out of "malevolence".

The massive fraud came at the worst possible time for the global finance industry. It will renew doubts about the stability, and ruling morality, of leading banks in the wake of the global recession threatened by the sub-prime crisis in the United States and beyond.

The scale of M. Kerviel's losses dwarfs any previous fraud by any individual "rogue" trader. Société Gé*érale, a pillar of the French financial establishment since the 19th century, estimates its losses as €4.9bn or $7.2bn. That is almost five times as much as the $1.38bn blown by the British trader Nick Leeson on the Asian futures market in 1995: losses that destroyed the British merchant bank Barings. The money lost by the French bank approaches in dollar terms the $10bn wiped out by the world's biggest banking scandal, the collapse of the fraudulent Bank of Credit and Commerce International in 1991.

Source : Independent

These figures are absolutely huge, how could one person manage this :o :o