Societe General report - updates

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAp37s1btaVI&refer=home

May 26 (Bloomberg) — Societe Generale SA’s report on how Jerome Kerviel evaded the bank’s controls to amass 50 billion euros ($79 billion) in unauthorized bets on stock-index futures backs up what he’s told authorities, his lawyer said.

“It validates what Jerome has said,” Guillaume Selnet, Kerviel’s defense lawyer, said yesterday in a telephone interview. “The only possible explanation is negligence, individual and systemic negligence.”

The report, commissioned by the Paris-based bank after it announced a record 4.9-billion-euro loss in January from unwinding Kerviel’s positions, faulted supervisors for not reacting appropriately to several “alert signals.” They missed at least 1,071 bogus trades used to disguise the risk of the positions and reduce the level of scrutiny internal controllers would apply, the report released on May 23 said.

Kerviel, 31, is under criminal investigation on charges of breach of trust, falsifying documents and hacking the bank’s computers to execute and conceal trades. If convicted, he faces as much as five years in prison and 375,000 euros in fines.

This article contains some commentary and updates regarding the report that was released into the losses at Societe Generale.

Ensuring that you have the right compliance and risk processes in place, that they are followed, and that there is an audit trail in place is something that I suspect is an industry wide issue. An issue which will need to be looked at by individual businesses, their regulators and shareholders, how this affects your business will depend on a number of factors, do check out the article.