Computerworld UK - By Siobhan Chapman (28/01/2008)

Biggest fraud in investment banking history

French banking group Societe Generale (SocGen) has reported a £3.6 billion (AU$8.2 billion) loss due to the fraudulent actions of a rogue trader who used his “in-depth knowledge” of the bank’s fraud control systems to circumvent internal checks.

Jerome Kerviel, a Paris-based trader working on the bank’s European equities derivatives desk, used knowledge gained from his previous position in the middle office to take fraudulent positions in 2007…

Ralph Silva, senior analyst at TowerGroup, said: “Fraud prevention is a fundamental aspect of operational risk. SocGen has undergone a failure in their operational risk program. Operational risk lags behind the ability of fraudsters to take advantage of loopholes.”

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