The Société Générale (SG) investigation into rogue trader Jerome Kerviel has found no evidence of an accomplice, but criticises the bank's oversight teams for failing to take the initiative in following up 93 alerts triggered by his unauthorised trades.The bank said that its internal controls had worked as planned, but that it did not have any controls in place that could have stopped Kerviel.
SG admitted that it did not monitor transactions that were subsequently cancelled or modified, nor nominal positions (as opposed to net positions), nor transactions with unspecified counterparties or unusual dates.
Its staff were too ready to accept Kerviel's explanations when internal monitors raised the alarms - which happened a total of 93 times, the report said.
Though five other banks - not named in the report - were involved in Kerviel's deals as counterparties, most of the deals relied on using internal counterparties, which did not trigger alarms based on the size of the counterparty risk. The eight forward deals that finally raised suspicion were with a small bank in early January this year.
The report also highlighted the extent of Kerviel's deception - while he continued to report only a minimal profit or loss, his actual profit and loss in 2007 dipped to a loss of more than €2.5 billion before rising to around €1.5 billion profit at the end of the year.
Topics: Societe Generale
More on Regulation
Disagreement among FSB members pointed to by BoE letter
Liquidity issues means the MAS is right not to bring in Sef trading
Regulators criticised for reticence over why they rejected some test results
On Thursday, eurozone bank supervisors will be asked to give up dozens of safe harbours
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.