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Société Générale

In: GLOBAL DERIVATIVE DEBACLES From Theory to Malpractice

Author

Listed:
  • Laurent L Jacque

Abstract

On January 24, 2008 at 8 am (Paris time) Société Générale (SoGen) announced in a terse press release that it had been the target of a fraud amounting to the modest amount of €4.9 billions ($7.2 billions). Ironically, the mother of all derivatives debacles had hit SoGen's equity trading desk—its inner sanctum for which the bank was most admired. Trading in SoGen's stock was suspended while the international financial community reeled in disbelief. A young trader Jerôme Kerviel was accused of building mammoth positions in stock index futures which he had hidden through fake offsetting trades. How could a junior trader fool the control systems of one of the most sophisticated bank? Why did he do it? Or was Kerviel made a convenient scapegoat for SoGen's acquiescence of one of its traders' reckless but highly profitable trades. The saga of wild speculation cloaked in deceit of what soon became “l'affaire Kerviel” is recounted next.

Suggested Citation

  • Laurent L Jacque, 2015. "Société Générale," World Scientific Book Chapters, in: GLOBAL DERIVATIVE DEBACLES From Theory to Malpractice, chapter 11, pages 179-196, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814663267_0011
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