SocGen's Kerviel - "hang on, I'll just write an email"

Highlights of recent snippets from the FT to emerge from the Soc Gen saga
Staggering but amazingly basic weaknesses in the control environment.

Labels:

posted by John Wilson @ 1:49 PM Permanent Link newsvine reddit



1 Comments:

At 3:41 PM, Blogger Jeremy Farshore-Swimwell said...

Is it really staggering? The fact that he falsified emails (effectively forging evidence), and created so many false trails to hide his positions and managed to get away with it for a period of time is not so surprising, or that shocking. Nor is it evidence of abnormal arrogance or complacency on the part of SocGen. Their systems ahd flaws and he knew his way around them. That's really not the point.
Indeed, most people seem to have missed the point about Kievel..sorry Kerviel.
What appears to be more strikingly stupid is that he and (according to his account) many others expected to gain substantially increased bonuses by trading outside their remit. No matter how sophisticated the controls, traders will always find loopholes if you link their bonus to the profits they make, without placing limits in keeping with their trading limits.
What scares me most is that most commentators have failed to pick up on this obvious incentive to cheat the system.
SocGen are far from alone. I know one Asset Manager who fails to see the danger in charging error losses to the bonus pool. They think they are creating an incentive to stop errors, but have obviously never even heard the phrase "unintended consequences".

 

Post a Comment

newsvine reddit

Links to this post:

Create a Link

<< Home