Less than a month ago I discussed the disaster being experienced by the Royal Bank of Scotland (RBS) and its Irish subsidiary as a result of a software installation screwup. For RBS the nightmare continues as it now calculates the huge losses it experiencing as a result of the technology meltdown, its “mis-selling” of interest…
TURNING and turning in the widening gyre The falcon cannot hear the falconer; Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world, The blood-dimmed tide is loosed, (from William Butler Yeats’ The Second Coming (1919)) Sometime in the late 1980s bank executives discovered that their institutions should be “high performance…
I tell my class that a crisis can spring from the most unexpected sources. You never see the lightning that strikes you. Now we focus on some of the most obvious risks, such as a sovereign debt default. As Howard Schneider reported in the Washington Post yesterday, “European banks are facing a reckoning over hundreds…
Jérôme Kerviel, the former Société Générale trader who lost EUR 4.9 billion in unauthorized trading in 2008 was sentenced to three years in prison today and ordered to repay the bank the entire amount of his losses. From the FT: By his deliberate actions, he put in peril the existence of the bank that employed…
The Journal of Regulation & Risk North Asia has just published its issue for the Summer/Autumn 2010. Do not be misled by the title: a sign of these global times is that the issue is full of mutually relevant commentary on issues concerning US, European and international financial regulation and is going to be an…
The Jérôme Kerviel three-week trial ended in Paris on Friday, and that means that this post is my last in this series. Kerviel will have to wait until October 5, when the Court has said that it will announce its decision, to find out whether he’ll spend the next four years in jail and be…
In this series of posts on the Jérôme Kerviel trial, I’ve argued that, contrary to Société Générale’s contentions that they were duped by a genius, the bank itself is to blame for Kerviel’s massive losses. Soc Gen ignored major warning signs regarding the size and scope of Kerviel’s trades, and ultimately was complicit in the…
In my last post, it’s the culture, stupid, I noted that a review of the Société Générale scandal reveals a familiar pattern of organizational and departmental change that stressed trading and oversight systems, followed by a failure to respond to common red flags and warning signals. But, rather than increasing their vigilance regarding potential employee…
In testimony last week, Eric Cordelle, Jérôme Kerviel’s immediate supervisor at Société Générale confirmed a point about which I’ve previously blogged: the Delta One desk on which Jérôme Kerviel worked at Société Générale exceeded trading limits “quite frequently.” Cordelle claimed, however, “that this was usually for technical reasons and he had not known of a…
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