Posted on 01/24/2008 2:03:01 AM PST by TigerLikesRooster
French bank finds $7.14 billion fraud
By EMMA VANDORE, Associated Press Writer
9 minutes ago
French bank Societe Generale has uncovered a $7.14 billion fraud that, combined with a write-down from its subprime exposure, will force it to seek $8.02 billion in new capital, the bank said.
France's second-largest bank by market value after BNP Paribas SA said it detected the fraud at its French markets division the weekend of Jan. 19. A trader at the futures desk had taken "massive fraudulent directional positions in 2007 and 2008 beyond his limited authority," SocGen said.
The trader, who was not named, used his knowledge of the group's security systems to conceal his positions through a series of elaborate fictitious transactions, a SocGen statement said.
The individual confessed to the fraud, the bank said, and was being dismissed. His supervisors were to leave the group. An analysis confirmed the "isolated and exceptional nature" of the fraud, the bank said.
Subprime writedowns linked to the crisis in financial markets amounted to $2.99 billion, the company said.
As a result, the bank is planning a capital hike in the "following weeks."
The write-down and losses related to the trading incident will lead the company to post a net profit of $874 million to $1.16 billion) for all of 2007, the Paris-based bank said.
Chief Executive Daniel Bouton offered his resignation but it was rejected by the board, the bank said.
The French market regulator, the AMF, said it had no comment on the multi-billion euro losses. France's Banking Federation also declined to comment.
Speculation the bank would announce more subprime-related losses has hit shares in past weeks.
Trading in Societe Generale shares was suspended Thursday, a spokeswoman for Paris market operator Euronext told Dow Jones Newswires.
Shares of SocGen closed down 4.1 percent at $115.25 on Wednesday. In the past six months it has lost nearly half of its market value.
Full-year results will be announced Feb. 21.
Ping!
A billion here, a billion there, pretty soon you’re talking about some real money......
“The individual confessed to the fraud, the bank said, and was being dismissed.”
Ya think?
And there you have it people. I think in the coming year or so, there will be a lot of similar stories as this spoof labeled mortgage meltdown unfolds. There just is not as many foreclosures, in dollar value, as they say there are. Not to say that it isn’t a problem, just more to the story then being disclosed. IMO
C'est la France. He'll be drawing his salary on the Riveria until he retires before they can actually go through all the paperwork and reviews to fire him. His "supervisors"-INO will probably have to retire a year early at 54 on a miserly 90% of their previous salaries. Oh, l'injustice! It reeks of L'Affaire Dreyfus!
For $7 billion this guy is “dismissed?”
The "Gallic shrug" gesture has a number of meanings:
* It's not my fault
* I don't know
* I doubt it can be done
* I don't really agree
Raise your shoulders; hold up your hands, palms out; stick out your lower lip; raise your eyebrows; and say "Moi, je n'y peux rien," "Moi, je n'en sais rien," "Alors là," or simply "Bof !"
After the fist billion, I would have stepped out for some coffee and never returned.
Wonderful timing.
Another story by AP or whoever, said he was “suspended”. Har har.
Largest sovereign wealth funds and their estimated assets:
United Arab Emirates
$500-$875 billion
Norway
$357 billion
Singapore
$100-$300 billion
Saudi Arabia
$275 billion
Kuwait
$213 billion
China
$200 billion
Russia
$148 billion
Source: Peterson Institute for International Economics
The story put forward by the bank must be a fraud.
How can an employee be unsupervised to the point of being able to defraud the bank to the tune of $7 billion. Then when caught simply gets “dismissed”??? What about legal action much less criminal charges? Who in their right mind would put money into a bank that has so little supervision over its customers money??? The whole story smells.
It would be interesting to do the comparison per capita.
Population, natural resources and land mass makes a difference in how the numbers would work out.
In the case of China and Russia, it may be higher due to their Mafia’s not reporting all their wealth.
Right. I’m also thinking $7 Bil is a lot of money to spend. Seems like this employee might have his accounts frozen and at least some of the $ Billions returned or seized?
When liberals, Democrats are in power, everything is roses according to the media. Like the Clinton recession never happened, though it had progressed under Mr Clintons administration if the press was to be honest about the economy.
You have to wonder how anyone thought they could get away with a $7.14 billion fraud. You also have to wonder what he did with the money. Seems kinda hard to imagine that much money simply disappearing.
It appears so. This is the same sort of nonsense that killed Barclay's Bank; a rogue trader got upside down and kept doubling the bet to try and recover.
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