Control dynamics in rogue trading: Sovereignty and exception-to-the-rule attitudes in the contemporary financial sphere

Sovereignty, for Derrida (2005, 2009), is defined by an exception-to-the rule attitude: the sovereign is the one who decides on an exception. A sovereign can thus “go rogue” and behave as an outlaw, transgressing the rules of his own community. This article applies this conception of sovereignty to analysis of the Kerviel-Société Générale (SocGen) rogue trading affair. It examines the exception-to-the-rule attitude found in the actors of the financial sphere (the trader, the bank, the State) and the underlying control dynamics. Our results show that the trader acts as a rogue when he takes the exceptional right to place himself above his bank’s rules on position-taking. The bank is equally rogue when it reserves the exceptional right to place itself above the prudential regulations governing its sector. The State goes rogue too, granting the banking supervisory body the exceptional right to administer criminal justice. Following Boltanski (2011), our analysis explains these exception-to-the-rule behaviors by the contradictory logics that drive them. Two logics are identified in the financial sphere: the market logic, and the prudence logic. We highlight that fraud, and more generally the exception-to-the-rule attitude, result from the ambivalence generated by the coexistence of these contradictory logics of action, which are notably conveyed through control mechanisms. The study concludes that the State has a major role to play in this respect. More specifically, we raise the point that the neoliberal style of the penal State contributes to the occurrence of fraud.