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]
He’s not getting paid and he’s been told not to show up at his desk at Société Générale—but allegedly rogue trader Jerome Kerviel still has his job at the French bank, according to the Wall Street Journal. The situation arises from a unique and glorious meeting of French employment law and an order from the French judge in his case.
Unlike Wall Street, where employees can typically be fired at a moment’s notice, French law requires that the bank must explain it’s decision to fire him at a sit-down meeting arranged in advance. Kerviel is permitted to bring along a union representative, a lawyer or even his mom. The judge in the case, however, has forbidden Kerviel from having any contact with the bank. So it seems that until this order is lifted, Kerviel will keep his job and Soc Gen will remain the bank that continues to employ the guy who lost them billions. (Now that we think about this it does kind of remind us of Wall Street—or at least Bear Stearns.)
Let’s focus for a moment on this order from the French judge. It has been fueling speculation that authorities fear that Soc Gen may be attempting to use Kerviel as a ‘fall guy’ in the case, and that contact between them might serve to allow them to conspire together. In short, they may be being kept apart like murder suspects in a police procedural. Which is to say, it looks like Soc Gen remains a suspect in the case.
In a French Twist, Infamous Trader Gets Hero Treatment [New York Post]
The news that the police have seized French rogue trader Jerome Kerviel’s personal computer reminds us of a important rule of criminal behavior: don’t have anything incriminating on your home computer. We’re not just talking about a spreadsheet detailing your phony hedges. Anything that is even embarrassing to you or your friends and family can—and probably will—be used against you by the authorities. Legal culpability or admissibility is no guarantee of safety. Emails about an illicit affair? That’ll end up in the papers. Awkward conversations about a drunken weekend? You’ll be hearing about that on the evening news. Huge collection of music downloads? You’re not only a rogue trader, you’re a copyright pirate. That’ll make the news. The point is to drive the accused to confess, by almost any means necessary.
We can hope that this kind of abusive prosecution might someday be stopped. By hoping isn’t a strategy. Erasing your hard-drive is.
SocGen trader’s PC seized from brother’s flat [Reuters]
That’s the question raised yesterday by Deal Journal’s Heidi Moore. Her suggestions:
Tom Cruise – of whom Kerviel’s Paris neighbors say he is a lookalike. But we think Paul Rudd–the romantic love interest from the classic film “Clueless”–wins the resemblance sweepstakes hands-down. Ed Norton, former boyfriend of Francois Pinault’s wife, Salma Hayek, has played men who make things disappear. Patrick Dempsey has the mop and the puppy-dog eyes.
We love this game. At first, the only suggestion the entire DealBreaker Bunker came up with last night was Charlie Sheen. But he already played this role back in Oliver Stone’s Wall Street. And we’d want that Sheen anyway, not Charlie from 2 ½ Men. Scratch Sheen, then.
Then a revelation came: Liev Schreiber should play Kreviel. He was brilliant as Richard Roma in the production of Glengarry Glen Ross a few years ago. He’s got what the New Yorker once described as an “uncanny instinct for isolating the frightened, frail, goofy parts” of characters. And when we saw him in Talk Radio he smoked up a storm, which means he can definitely play French.
Who Would Play Jerome Kerviel in the Movies? [DealJournal]
Update: Now the Telegraph is in on the game too.
We’ve been trying to get in touch with people who knew Jerome Kerviel but the guy seems to be one of those “kept to him over the weekend at Societe Generale. Right now he’s just a name, a face, an accusation, a denial and lots of speculation. We want to find out who he was.
In case you’ve been too busy to notice, Kerviel is just about the most famous name in finance right now. He’s accused of causing a $7 billion loss at SocGen. After a brief period where it seems he may have gone fugitive, he turned up in Paris. After questioning by police it emerged that he admitted to placing the trades but denied any fraud was involved. The court released him on bail and declined to press fraud charges.
Now there are serious questions about what SocGen knew and when about Kerviel’s trading activities. There’s a widespread suspicion that if Kerviel’s trades were exactly authorized by the bank, it may have turned a blind eye to his risky trading. At some point he seems to have been able to make trades totally as much as ten times the losses the bank suffered. How did that happen with no-one noticing? The European futures and options exchange apparently raised questions about Kerviel’s trades back in November. What’s more, as we first learned from our commenters, Soc Gen’s panicked dumping of Kerveil’s positions seems to have worsened the losses.And now, of course, everyone is speculating that Soc Gen might get sold to someone.
We want to avoid all this “lone trader” and “nice boy who kept to himself” stuff. But it’s damned hard when no-one even seems to remember him. The more questions we ask, the more it seems he really was a loner desperately seeking acceptance and a way out of his congenital anonymity. It freaks us out to watch a cliche come to life.