So how did Soc Gen’s infamous rogue trader get away with building up those huge positions? Joe Seet says the accounting control and risk operations from proprietary trading at many investment banks have serious inadequacies. It’s one part intellectual. The back office staff often lacks experience necessary to understand complex trades. And one part psychological: the back office is all too often awe of the traders. The problem, he warns, is not confined to Soc Gen.

Serious Lapses of Operational Control at Societe Generale; were they avoidable? [Sigma Partnership]