5. Who is Jerome Kerviel?
1. Name: Jerome Kerviel
Age : 31 years
Education: Masters of Finance, University of Lyon
Starting Position: Risk Management Office
•Ending Position: Lower-level trader.
Co-workers’ impressions:
•Quiet And unassuming trader.
•Unimpressive education background.
• motive to impress his seniors.
6. • Job Goal: Create small, low-risk profit stream
based on Large volume.
7. . What Kerviel Actually Did?
• Bypassed all internal controls and made high risk
unauthorized trades for a total of $87 billion in
trades.
• Purchased of 140,000 DAX(german stock index)
• He exceeded the company overall market cap of
52.6 billion.
• He bypassed controls by creating fictitious trades in
“trading book” to offset his trades.
8. HOW DID HE BYPASS CONTROLS:
• Learnt internal controls in starting position in
back-office.
• Exactly knew the internal checking schedule and
removed all false transaction in books minutes
before check.
• Used other employees passwords.
• Took minimum vacation days.
9. Is Supervisor Know about him?
• Supervisors ignored over 75 trade errors.
• Reward his behavior with a proposed bones
of $440,000.
10. Company Reaction
• After the fraud deduction of 7.14 billion.
• Socgen immediately report to the French central Bank.
• Kerviel Employment was terminated along with his
supervisors.
• Both the CEOs submitted a formal resignation .
• ON 25 JAN 2008 SOCGEN took out a full page newspaper
article apologizing to its customers for scandal.
.30 Jan board announced the formation of independent
committee to investigate the case.
11. Govt Reaction
• On Jan 26 kerviel was taken into police custody.
• The French president state that to the boards of
directors to take action senior management
including bouton.
• On Jan 28 kerviel were charged with unauthorized
computer activity and breach of trust.