The Times focuses on the last few months of Jerome Kerviel's trading adventures but offers up a detail that raises way more questions than it answers. To whit: The Times is now saying that Kerviel had a $2 billion profit in late December 2007, before markets fell and the bank ended up with a $7 billion loss. Last week, The Wall Street Journal reported that he had a 1.6 billion euros ($2.3 billion) "locked-in gain" for 2006, which amounted to a third the bank's profits. So is this possible? SocGen would just sit there and stare at multibillion profits from a guy like Kerviel two years runnning? With profits like this, why was Kerviel still a middle-level trader? Did those gains ever get booked? If so, did someone beside Kerviel get a bonus on those profits? In short, what does any of this spurious detail mean?
Can someone answer these questions? Apparently not. The SocGen trading scandal really shows how lousy reporting on complex trading strategies can get. If there's an episode that has produced more silly speculation while throwing so little light on the technical "facts" of the case, I don't know it. - Robert Teitelman
See story from The New York Times
See Dealscape: Maybe they should've made him a senior rogue trader
See Dealscape: SocGen trader's resume
