Huge “Fraud” at SocGen : $7.1 billion Lost
You see, SocGen didn’t lose much money on subprime, they had a “exceptional fraud”, nuance as they say. All reports I have seen so far use “fraud” instead of plain fraud. SocGen’s credibility is sinking to bernankian depth.
The bank found out last weekend that a trader in Paris had secretly set up positions that will cost the company 4.9 billion euros before tax. The trader, who wasn’t identified, went beyond permitted limits on futures linked to European stock indexes.
Societe Generale’s report of fraud comes four months after French competitor Credit Agricole SA said an unauthorized proprietary trade at its investment-banking unit in New York cost it 250 million euros.
Societe Generale said that it’s already closed all the positions set up by the trader, who had used his experience working in the back office to hide his trades through fictitious transactions. The fraud was discovered Jan. 19 and 20.
Societe Generale said it’s taking 1.1 billion euros of writedowns linked to the U.S. residential real estate market, 550 million euros linked to U.S. bond insurers, and 400 million euros on other unspecified risks.
In the third quarter, the bank reported 375 million euros of writedowns and trading losses linked to turmoil in financial markets. The world’s biggest financial companies have announced more than $120 billion in writedowns and credit losses as the U.S. housing slump rattles debt markets.
Via Bloomberg : Societe Generale to Raise EU5.5 Billion After Fraud
Related :
Societe Generale reports $7.1 bln trading loss from “fraud”
I Was The Golden Child of Credit Trading
Added :
You can’t make that up:
Equity Derivatives House of the Year - Société Générale
FT Alphaville is on the case :
[ 1 ] “Much more to be told here” - SocGen’s €5bn mega-fraud
[ 2 ] The SocGen mega-fraud - let’s start with some text and pictures
[ 3 ] “This is Leeson-squared”