The New York Times wrote Wednesday morning that the report on the rogue trading at Societe Generale SA will be out later Wednesday. Can't wait. By now it's clear that that report is less about what Jerome Kerviel did or didn't do, but how wide the net of complicity at the bank spreads. Still, even at this late date, there are mysteries.
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The Times, picking up on International Herald Tribune reporting, quotes a French court document that says Kerviel reported a loss last summer, but continued to trade, which certainly raises questions about supervision. (The New York Times Co. owns the IHT, and in fact both stories share the same byline). And once again, the fact that the bank reported a large gain at the end of the year for Kerviel, only to take an even larger loss a few weeks later is inexplicable. If there was a larger conspiracy, it's hard to imagine that Kerviel was the only trader playing fast and loose at SocGen.
Another question: If the hedges on a big gain are fake, can the bank legitimately take the profit? And did the bank have to precipitously unwind those trades, without making some effort to replace fake hedges with real ones? At the end of the day, it's simply mind-boggling to think that a single trader could generate those large gains and losses without a relatively senior executive being aware of it. - Robert Teitelman
See earlier Kerviel stories from Dealscape
