Massive Fraud at Societe Generale by Rogue Paris Trader, Also Announces Losses Related to US Subprime
French bank Societe Generale says it has uncovered "massive" fraud by a Paris-based trader which resulted in a loss of 4.9bn euros ($7.1bn; £3.7bn).The bank said the fraud was based on simple transactions, but concealed by "sophisticated and varied techniques".
Societe Generale also announced new write-downs of 2.05bn euros related to the subprime mortgage crisis in the US.
The bank's shares, which were suspended in the morning, lost 3.6% when they resumed trading.
Societe Generale said one trader had taken what it called "massive fraudulent directional positions in 2007 and 2008 beyond his limited authority".
The trader, a French man in his 30s who joined the bank several years ago and earned a salary and bonus of less than 100,000 euros, was responsible for betting on the markets' future performance, executives said.
"I'm convinced he acted alone," said Jean-Pierre Mustier, chief executive of the corporate and investment banking division,
Published on January 24, 2008
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