Fraud of the Century

[Galbally]

So a 31 year old futures trader working for France's second largest bank, Society Generale, has somehow managed to lose somewhere in the million of €5.5 billion! (or $7 Billion) in a fraudulent cover up.

To give you some idea, thats €5,500,000,000 in absolute figures. It would take the average French worker about 16,500 years to earn that much money, and this clown has blown that money on fraudulent futures trading on European stock markets over the course of a few months.

The mind truly boggles, this makes Nick Lesson wrecking Barings Bank of London with losses of £600,000,000 seem like peanuts. It makes you wonder about the people who are running the global economic system and premier financial institutions when things like this happen!

[drumbunny1]

So do you know what the consequences will be for a crime like this? Will this money ever be recovered I wonder?

[Galbally]

Well I am sure some form of prosecution will be brought against this man, and its likely that a lot of other people at the bank are going to be fired, but as to recovering the money, well he has already lost it on the open market in trading, so it can't be gotten back, and its unlikely that he would have a few billion handy where he could pay back the money, so ultimately its the bank's shareholders that will take the hit. I think that although such things are not unprecedented, the scale certainly is, and it couldn't come at a worse time, there is already a mini bank crisis in Britain across the channel because one of its main commercial banks (called Northern Rock) has been in serious trouble, and is currently being held in administration, while a buyer with a less suicidal business model can be found, of course while this goes one the bank is being kept alive by £55 billion of British tax payer's money, not all of which may be recovered. So I think in general it will just increase the worry people have about the global banking, and financial trading systems and how they are managed and regulated. Of course globally it's not a great time already, in fact its pretty bad in world financial circles, especially in the States, so this guy really had timing as well as a "heroic" (for want of a better word) attitude to investing other people's money.

[Galbally]

I have to say that there really needs to be a long hard look at the whole global system that allows the really large investment banks to operate so recklessly with enormous amounts of capital that is starting to look seriously dangerous to the entire world economy, after all we are talking about serious, serious amounts of money, and don't forget that the top people who work this global system annually award themselves absolutely astronomical amounts of money, and rarely seem to face consequences in any proportion to the damage that their mistakes and seeming incompetence on occasion result in. Though in the Enron case the executives did end up with serious jail time, though that's a slightly different issue and was basically all out corporate fraud. We are talking about institutions and corporations that even dwarf Enron here in terms of pure financial power, though I don't think anyone is claiming that Citigroup or HSBC are rotten institutions in the way that Enron is, just that the trading models they have developed over the past 10 years are based on very questionable standards of fiscal probity, and the fact that the entire sector has a huge vested interest in playing fast and loose with global trading should give serious pause for thought for the bodies supposed to regulate what goes on.