A reader experimenting with his sadomasochistic side sent us the following two images this morning and asked, separated at birth?
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]
Jerome Kerviel Is The Reason I Walk With A Limp (Leave Your E-Mail Address In Comments If You’d Like To Hear More)By John Carney
As if he didn’t have enough on his mind, Jerome Kerviel must now bear the shame of knowing he’s the reason individuals with no discernable skills, initiative, brain cells or looks won’t get cannonballed from the back office to the trading floor anymore, so sayeth Bloomberg reporter Fabio Benedetti-Valentini. Sources tell Benicio del Toro that before the SocGen scandal, you could be, for all intents and purposes, “a moza-fuckeeng retarde” and still be executing trades by your second week on the job. Now, not so much. “When Jerome Kerviel pilfered that $7 billion,” Benedetti del Toro Valentini writes, “he wasn’t just pilfering money, he was pilfering a time-honored French bank tradition of promoting incompetents into positions of great importance.” Further digging by Vesit La Giubba Benedetti revealed that that wasn’t the only shit Kerviel fucked up for everyone else. As it turns out, Kerviel fucked everything for everyone everywhere. Look closely, Benedetti Valentini Bruni Pesci notes, and you’ll see that Kerviel can be blamed for: Global warming, Hepatitis C, feline AIDs, and the marijuana drought. One area man even told Benedetti Valentini Mosconi Bruni La Giubba Pesci Gasparino that he believes the rogue trader is to blame for his difficulties rising to certain occasions in the marital bed. “Ma femme, she say ‘C’est la booze!’ but I know Jerome, he had a hand in dis!”
On a related note, I’d like to add that so far no one has correctly matched all 11 Steve’s to their corresponding photographs and the gallery tour/30 minutes of rink time remain up for grabs.
Kerviel Losses Erase Promotion Chances for Clerks [Bloomberg]
Hat tip: Barry Ritholtz.
You can already see the outline of the Jerome Kerviel movie we began casting a few days ago forming in stories about him. It will be a story about how a corrupt French class system drove one working class young man to go to extraordinary lengths to get ahead. The same set of rules he had to breach inorder to break through the Bourdeax bottle ceiling also told him he could only make pennies on the dollar with hedged trades. Of course they needed to be broken.
In short, the movie is very likely to follow the script of almost every Wall Street movie ever made, as Larry Ribstein has pointed out. “Films present Kerviel-types not as aberrant criminals, but as commentaries on the evils of capitalism,” Ribstein points out.
What’s more, you can expect trading profits to be seen as entirely produced by privileged insider access or dumb luck. While it is true that luck has a lot to do with some of the biggest wins in trading, the reason so many intellectuals and writers are attracted to the idea that trading profits are produced by luck or corruptions is because the markets are a mystery of them. They think of themselves as very smart people but they can’t understand how and why Wall Street makes money. It must be luck. Or deceit. Or maybe magic!
Since profiting by luck or insider status rather than merit is unjustified in the eyes of the intellectual class, those who damage the institutions seen as thriving on these profits can be heroes.
“So by hurting their banks, Leeson and Kerviel aren’t hurting innocent shareholders or undermining valuable capital markets. They’re providing a day of reckoning for a fundamentally evil system,” Ribstein says.
Jerome as Che [Ideoblog]