Preview

Jérôme Kerviel and Société Générale

Good Essays
Open Document
Open Document
674 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Jérôme Kerviel and Société Générale
Jérôme Kerviel and Société Générale

In brief

Société Générale S.A. (SocGen) is a French multinational banking and financial services company headquartered in Paris. The company has a Corporate and Investment Banking division (Derivatives, Structured Finance and Euro Capital Markets).
In the summer of 2000, Kerviel joined the middle offices in the bank Société Générale. He was working in the compliance department. In 2005 he was promoted to the bank's Delta One products team in Paris where he was a junior trader. His role was to arbitrage futures contracts on stock market indexes
In January 2008, the bank Société Générale lost approximately €4.9 billion closing out positions over three days of trading beginning January 21, 2008, a period in which the market was experiencing a large drop in equity indices. The bank states these positions were fraudulent transactions created by Jérôme Kerviel. The police stated they lacked evidence to charge him with fraud and charged him with breach of trust and illegally accessing computers. Kerviel states his actions were known to his superiors and that the losses were caused by panic selling by the bank.

Why did the incident happen?

On the 24th of January 2008, Société Générale organized a press conference to unveil the case of which they are victims. According to the CEO, a market operator, member of his team, had exposed the bank to market risk even though he was not entitled to; the bank has accused him of exceeding his authority to engage in unauthorized trades totaling as much as €49.9 billion, a figure far higher than the bank's total market capitalization. He had accumulated long positions with high leverage in futures contracts on stock market index and concealed the transactions by inserting fictitious opposite transactions into the computer system of SocGen.
The bank said that whenever the fake trades were questioned, Kerviel would describe it as a mistake then cancel the trade followed by replacing that

You May Also Find These Documents Helpful

  • Good Essays

    Mebel Doran & Company

    • 801 Words
    • 3 Pages

    The CEO of Mebel Doran & Company, Harvey Hegarty found out the M&A group of his Company had consulted the arbitrage desk about few specifics of Knox Corporation. The M&A and the arbitrage group would consult each other at times in order to structure effective financial strategies for the client, however, when inquired with the arbitrage group, the CEO found out that the arbitrageurs within the Company used to be in touch with other arbitragers in the market for information on any deals happening in the market, had got an enquiry about the Power Tie Corporation deal, which wasn’t handled well by the…

    • 801 Words
    • 3 Pages
    Good Essays
  • Better Essays

    Ethics Paper Final BU486

    • 1953 Words
    • 6 Pages

    In April and May of 2012, JP Morgan Chase & Co. incurred major trading losses of $6 billion dollars. However, JPMorgan’s financial statements represented these losses as only $2 billion. The losses were the result of risky bets taken in the credit markets by a trader named Bruno Iksil. Iksil worked at JP Morgan’s London office, and made extremely large trades in the credit markets. Because of this, Iksil earned the nickname “London Whale,” and this entire scandal is referred to as the “London Whale Scandal.”i In the worlds of finance and gambling, whales are people who “play” with very large sums of money.…

    • 1953 Words
    • 6 Pages
    Better Essays
  • Good Essays

    In the case of Bernard Madoff, an overview was provided that describes the fraud of the century. As a result of the Ponzi scheme, social attitudes toward the investment industry were lukewarm. I will describe the highlights of the case.…

    • 396 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Defrauded investors were not properly informed or obtained information about the securities they invested in "escrow syndicate" account which Nay personally dealt with.…

    • 799 Words
    • 4 Pages
    Powerful Essays
  • Satisfactory Essays

    Jon Lebed

    • 393 Words
    • 2 Pages

    In this case study we learn about Jonathan Lebed, at 15 years old, the youngest person during that time and the first minor to ever to face proceedings by the SEC for stock-market fraud. In 2000, Jonathan Lebed caused chaos in the stock trading industry and was accused of “pumping and dumping” stocks over the Internet. Between September 1999 and February 2000 Lebed made hundreds of thousands of dollars by posting in internet chat rooms and on message boards encouraging people to buy penny stocks he already owned, thus, according to the SEC, artificially raising the price of the stock. Lebed was found guilty by the SEC of wrong doing under Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 which addresses fraud in the use on interstate commerce. Under these acts it is unlawful for a person to intentionally provide false statements for the purposes of deceiving buyers. The SEC settled with him for a $285,000 of his earnings. His actions proved that the Internet could be a very powerful tool for fraud.…

    • 393 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    JPMorgan Chase Paper

    • 1303 Words
    • 6 Pages

    In the summer of 2012, JPMorgan Chase, the largest leading U.S. bank, announced trading losses from investment decisions made by its Chief Investment Office (CIO) of $5.8 billion. The Securities and Exchange Commission (SEC) was provided falsified first quarter reports that hidden this massive loss.…

    • 1303 Words
    • 6 Pages
    Powerful Essays
  • Better Essays

    Acc499 Written Assignment

    • 1520 Words
    • 7 Pages

    The Securities and Exchange Commission charged three executives of Electronic Game Card Inc. and their independent auditor with continually lying to investors about the operations and financial condition of the company. The executives had reported to investors that they had millions of dollars in revenues, investments, and an off-shore bank account. In actuality, the bank account did not exist, and the investments were in companies affiliated with two of the executives of the company, Mr. Cole and Mr. Boyne (U.S. Securities and Exchange Commission, 2012). Both of these men were charged in the case.…

    • 1520 Words
    • 7 Pages
    Better Essays
  • Powerful Essays

    Following the SEC’s inability to control Wall Street fraud, the U.S. Securities and Exchange Commission received sharp criticism from the public for its seemingly weak enforcement of Wall Street’s too big to fail banks. Many believe that the agency is unethically protecting Wall Street fraud due to the incident in 2010 when the National Archives had contacted the SEC expressing concern that an unauthorized destruction of federal records had…

    • 864 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    JP Morgan Chase

    • 605 Words
    • 3 Pages

    The purpose of this paper is to discuss the effects of how JP Morgan Chase, the biggest U.S. bank, announced trading losses from the decision make by its Chief Investment Office in the amount of $5.8 billion. It will also discuss actions taken by the Securities and Exchange Commission (SEC) for the misconduct on the part of JP Morgan Chase.…

    • 605 Words
    • 3 Pages
    Good Essays
  • Better Essays

    There are a variety of rules the Stanford Group broke. The culprits are the executive officers of Stanford Group and their use of one subsidiary, Stanford Investment Bank (SIB) and several other companies within the group, the company executives were charged with fraud. The fraudulent act that got them caught was, via SIB Stanford Group was fabricating high returns on CDs. Using fictitious CDs created by SIB, Stanford group faked high returns by using one of their subsidiaries as faux investors…

    • 1472 Words
    • 6 Pages
    Better Essays
  • Powerful Essays

    The Sarbanes-Oxley Act

    • 1565 Words
    • 7 Pages

    Many such scandals broke out during the period of 2000-2002, WorldCom, Tyco International, Adelphia, Peregrine Systems were a few to name. These scandals resulted in many investors losing their money, some who had invested their life savings, due to stock price crashes also causing instability in the stock markets. After a series of analysis and discussions, the senate passed a bill call ‘Sarbanes Oxley Act of 2002’.…

    • 1565 Words
    • 7 Pages
    Powerful Essays
  • Powerful Essays

    SEC v. Goldman Sachs

    • 3359 Words
    • 14 Pages

    When financial fraud has occurred to the American people by the alleged “Too Big to Fail” banks on Wall Street, is it more productive to the economy and society to criminally charge the executives of these financial institutions or negotiate a civil penalty that compensates victims and reforms the deceptive trade practices of our nation’s largest banks? Further, if settlement is the best solution, why settle for the less money than the financial harm caused by the big banks? The following will discuss the negotiations behind the Securities and Exchange Commission’s (hereinafter referred to as “SEC”) settlement with Goldman Sachs & Co. (hereinafter referred to as “GS&C”) and Fabrice Tourre, one of the largest securities-fraud settlements to date.…

    • 3359 Words
    • 14 Pages
    Powerful Essays
  • Good Essays

    Week 7 Tutorial COMM101

    • 592 Words
    • 2 Pages

    The collapse of Storm Financial was inevitable due to its reliance on fees from over-leveraged investors. The report represents a withering rebuff to rampant conspiracy theories put out by Storm's founder, Emmanuel Cassimatis, which the Commonwealth Bank had somehow acted to bring it down.…

    • 592 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Financial Fraud in Canada

    • 7202 Words
    • 29 Pages

    Bloomberg Businessweek. "The Greatest Financial Scandals: Charles Ponzi - BusinessWeek." BusinessWeek Slide Shows and Multimedia . N.p., n.d. Web. 3 Apr. 2011. .…

    • 7202 Words
    • 29 Pages
    Powerful Essays
  • Powerful Essays

    The Big Short Analysis

    • 1490 Words
    • 6 Pages

    This shows once again that there were no honourable, ethical investments made in The Big Short, just a devious move from someone who could see the flaws in the banking…

    • 1490 Words
    • 6 Pages
    Powerful Essays