1. Peter Gumble, European editor for Fortune
magazine, comments, "Kerviel is a stunning example of a trader breaking
the rules, but he's by no means alone. One of the dirty little secrets of
trading floors around the world is that every so often, somebody is caught
concealing a position and is quickly - and quietly - dismissed..This might
be shocking for people unfamiliar with the macho, high-risk, high-reward
culture of most trading floors, but consider this: the only way banks can tell
who will turn into a good trader and who even the most junior traders to take
aggressive positions. This leeway is supposed to be matched by careful
controls, but clearly they aren't foolproof." What is your reaction to
this statement by Mr. Gumble?
This is definitely true, Kerviel is an example
of a trader that breaking a rules. It shows greediness mostly with the money.
2. What
explanation can there be for the failure of SocGen's internal control system to
detect Kerviel's transactions while Eurex detected many suspicious
transactions?
Several internal and external
investigators of the bank' operating procedures and internal controls have been
completed. The Banking commission said that SocGen did not focus sufficiently
on fraud weaknesses and that there were "significant weaknesses" in
the banks IT security systems. Another report pointed out that Kerviel's direct
supervisor was inexperienced and received insufficient
support
to do his job properly.
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