French trader loses £5,000,000,000 oops. We hear so much about billions these days that it's easy to lose track of how much cash this is - a grand for every single person in the UK! Do the London types know how much traders usually deal with? Could this happen over here?
It could have been worse than that, he'd hedged bets on 'futures' with values up to 50bn euros (£37bn), luckily the bank caught on and withdrew all his transactions. Thats the size of france's annual budget deficit, and well over our annual defense budget! if he'd waxed all that he could have torn nick leeson a new arsehole.
I dont believe it. Apparently he had only lost 1.5 billion, and the other 3.5 billion was done by the bank itself closing his positions. Something smells fishy to me, perhaps a convenient way of covering up sub-prime losses maybe
Hopefully the truth will emerge, but I doubt it. Whichever version of events is true, someone has cocked up big time....
Brid, why so sceptical? They had already announced their sub-prime loss, and the amount traded by soc gen last week was huge, something like 10% of all trades on the futures market towards the start of the week I think. That can be verified outside the company. There's no way they could do that if Kerziel hadn't taken out the positions in the first place. Conway, he's already respsonible for 5 times the loss Nick Leeson racked up. In theory it could happen in London, or anywhere else really. In this case they're saying it happened becasue he helped design the IT controls used to prevent this stuff in the first place, so new how to manipulate them. But it could just as easily happen if you had a few people working together.
True, but if what he had lost everything he had bet on the market instead of having the bank rumble him and withdraw all his transactions, it could have been 50 times what leeson rinsed in one go.... ouch. The reason they lost so much was because they decided to undo his work at a time when the market was slipping downwards anyway and that amplified their losses in withdrawing from his speculated bets. There are some people speculating that the whole socgen debacle may have been what caused the US fed to slash their interest rates. It sounds like this bloke has had an in-depth knowledge of how to play the system - doesn't sound like the banking world has learned their lesson after the whole barings fiasco...
Im sceptical because such an inexperienced lone trader could be entrusted with so much ... apparently. Either way, the 5 billion figure is a lie .... He lost 1.5 billion and SOC GEN decided to write off the rest. Its fishy, and looks just as credible as the idea that Northern Rock is going down, all because a few hillbillies decided to take out a mortgage they couldnt afford in america. The banking system is behind most of the ill's of the 20th and 21st century.
No one's suggesting he was or should have been trusted with so much. The official line is that he bypassed IT controls that he designed in the first place so as to breach his trading limit. I've not read anywhere that he lost 1.5bn and the bank wrote down the rest. Actually, in theory, he didn't lose anything as it stood, it's just that when his ridiculous trades were discovered the bank would have stood to lose £40bn if they matured. To prevent this, they had to sell futures at increasingly worse prices, and so took an actual loss of about £4bn ish. I don't see what they'd have to gain by somehow masking a sub-prime hit in this scandal??? The whole market was caught out by that, socgen had already announced substantial losses due to it, why try and hide a bit more with some elaborate internal fraud 'story'? If any of the details of it seem fishy, and admittedly they do, it's probably more to do with the bank hiding details that make them seem shoddy and try to preserve what little's left of their reputation. A £5bn sub-prime loss would have been bad, but recoverable, and no different to the competition. On the other hand, the whole market finding out your recruitment policy, investment management, trading floor, internal controls, audit committee, and arbitrage strategy are all completely shit would have a devestating effect (which it may still).
Of course it is. How do you think wars, dodgy governments and economic cycles are funded and controlled?
I'd say those three cohabit a fairly mutually healthy smybiosis, with banks dipping in for a share of the cake, rather than being the actual baker.
I disagree, but hey - variety is the spice of life. I find it hard to believe that a single lone guy could put SOCGEN in the can for 5 billion .... one who hadnt been there very long either. In an age where we have companies like Enron and Wordcom going to the wall from massive scandals, the figures seem a little fishy to me to suggest this was just another Nick Leeson trying to influence the market with massive trades, and then betting the other way on it.
He's been there for 8 years like! And as for Enron etc. They're a fairly different kettle of fish to banking/trading fraud.
Its good to know you think of us at being at the tops of our game, just like those respective Higher Educational establishments that you just likened us to
i likened you's to oxford and cambridge boat race because no matter if yous win 99% of the population dont give a toss
Its quite funny how the news forum was created .... then all the people who used to compain about people posting 'boring' things about the news end up following us into the news forum to let us know. STALKERS.
