SocGen: Lax Controls Led to $7.2B Fraud

French bank says 24 internal alarms were ignored over 14 months
By Jim O'Neill,  Newser Staff
Posted Feb 21, 2008 7:50 AM CST
SocGen: Lax Controls Led to $7.2B Fraud
The detailed graphical timeline indicates where key events may have alerted Societe Generale to potential access and IT control exposures along the dangerous path Jerome Kerviel reportedly followed during his tenure. SailPoint's analysis suggests potential exposures that may have occurred based on allegations...   (Associated Press)

Rogue SocGen trader Jerome Kerviel, whose unauthorized deals led to a $7.2 billion loss for the French bank, continued his trading for more than a year after the first warning flag was raised in the department that was supposed to detect risky trading, reports the Wall Street Journal. Kerviel wrote at least seven bogus emails flagged for anomalies, and his trades tripped 24 alarms over a 14-month period beginning in July 2006, the bank admits in a report  released yesterday.

Most of the alarms triggered by Kerviel trades were written off as computer system errors; his explanations to supervisors were so confusing they dropped their questioning.
The bank, France’s second largest, concluded, “Systematically, employees were not thorough enough in their checks.” The bank found no evidence that Kerviel had accomplices. (More Société Générale stories.)

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