Puzzling over former Societe Generale trader
In Paris and financial circles, many ask: How did Jerome Kerviel become the key figure in the bank's $7-billion loss? And who is he?
PARIS — Huddled over lunch Friday at a bistro on the Champs- Elysees, two young bankers wondered about the double life of Jerome Kerviel, the rookie trader with French bank Societe Generale who is accused of the largest fraud in banking history.
How could Kerviel hide his lies, the HSBC man asked his friend, who works in Societe Generale's glass-tower headquarters on the rim of Paris.
How could he elude so many levels of controls and cause his bank $7.2 billion in losses?
"He'd have to keep checking just at the right moment," the HSBC banker speculated. "He must have never left his computer screen. Not even to eat."
Around Paris and among financial workers around the globe, many marveled: How could one rogue rack up so many billions in losses without anyone knowing? And who is this guy anyway?
Mostly he appears to be a game warden turned poacher, a young man trained at the nondescript schools of France's second cities, in Nantes and Lyon, to monitor the billions in trades banks execute every day. Then he apparently used his intimate knowledge of how a bank protects itself to engage in unauthorized trades and evade detection.
As far as anyone can tell, Kerviel didn't do it to steal money. He did it, apparently, because he could.
But there remained many unanswered questions Friday, and Kerviel wasn't talking. A sign on the mailbox of hisposh Neuilly-sur-Seine apartment, a short walk from his office, said: "Don't search here. He has been seeking refuge elsewhere probably for some time now."
In the charming village in Brittany where Kerviel grew up, a few hours from Paris, a neighbor told Reuters that his mother, a retired hairdresser, had rushed off to the capital to join her son, "who wasn't doing well."
Neither was his former employer. Societe Generale stock was downgraded Friday by UBS and Deutsche Bank.
Kerviel's job entailed hedging the bank's trading positions in European stocks with stock index futures. This involves making countervailing bets on which way stocks will move as an insurance policy to protect the bank's portfolio.
On Friday, bank executives told reporters that Kerviel might have been gambling "tens of billions of euros" in unauthorized trades, far more than initially thought.
A week ago, he apparently made a small error and tripped a security wire. By last Saturday night, he was apparently helping the bank retrace his trail of fraud, according to a source inside the bank.
