Find all School-related info fast with the new School-Specific MBA Forum

It is currently 24 Oct 2014, 17:41

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

The French Fraud King - $7.14 billion fraud by one man

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
Expert Post
Founder
Founder
User avatar
Affiliations: UA-1K, SPG-G, HH-D
Joined: 04 Dec 2002
Posts: 12349
Location: United States (WA)
GMAT 1: 750 Q49 V42
GPA: 3.5
WE: Information Technology (Hospitality and Tourism)
Followers: 2325

Kudos [?]: 9455 [0], given: 3702

GMAT ToolKit User Premium Member CAT Tests
The French Fraud King - $7.14 billion fraud by one man [#permalink] New post 24 Jan 2008, 22:58
Expert's post
This off-topic as pure bschool life relates - but so much about the business world - could not resist posting. Mods feel free to move as consider appropriate.

The French Fraud King - $7.14 billion fraud by one man
http://biz.yahoo.com/ap/080124/france_s ... fraud.html
_________________

Founder of GMAT Club

Just starting out with GMAT? Start here... | Want to know your GMAT Score? Try GMAT Score Estimator
Need GMAT Book Recommendations? Best GMAT Books

Co-author of the GMAT Club tests

Have a blog? Feature it on GMAT Club!

Get the best GMAT Prep Resources with GMAT Club Premium Membership

CEO
CEO
avatar
Joined: 15 Aug 2003
Posts: 3470
Followers: 60

Kudos [?]: 675 [0], given: 781

Re: The French Fraud King - $7.14 billion fraud by one man [#permalink] New post 24 Jan 2008, 23:44
I was watching fast money and this came up for discussion. A couple of traders were calling BS on the official story -- Company lost money, threw the guy under the bus. Seems Enronesque -- How could someone at the top not know?

Quote:
The bank called the fraud "exceptional in its size and nature," and said it apparently went undetected for more than a year by its own multilayered security systems.

It would place the young trader, identified as 31-year-old Jerome Kerviel, atop the pantheon of rogue traders for a scheme from which bank executives said he apparently did not make a personal profit.
Manager
Manager
avatar
Joined: 15 Sep 2007
Posts: 69
Followers: 1

Kudos [?]: 2 [0], given: 0

Re: The French Fraud King - $7.14 billion fraud by one man [#permalink] New post 10 Feb 2008, 09:18
I am quite surprised too as to how this guy could go on taking positions without the managemetn getting to know.

Most Trading companies have strictly defined trader limits for purposes of reporting the Value at Risk.

However, instances like these arent that uncommon.........search for Hamanaka (Sumitomo) and you'll get an idea.......
VP
VP
avatar
Joined: 11 Dec 2006
Posts: 1430
Location: New York, NY
Schools: NYU Stern 2009
Followers: 38

Kudos [?]: 219 [0], given: 6

Re: The French Fraud King - $7.14 billion fraud by one man [#permalink] New post 10 Feb 2008, 09:43
He used to be in middle office and still had passwords. He took large one way trades, and booked fake trades to reverse them (typical method for a delta one desk, but he was not booking the reverse). His VaR would simply be the net of the fake and real trade - he kept rolling the fake trades so not to communicate the trade to them (they would not know of it) - a lot of work.

The way he was caught is that the fake reverse trade on one deal took the counterparty over its credit limit, so would have been subject to margin calls. I find it crazy that he was allegedly trying to hide the 1.5bn profit from 2007 when he managed to wipe it out, and turn it into the 5bn loss.
_________________

Get the best GMAT Prep Resources with GMAT Club Premium Membership

Re: The French Fraud King - $7.14 billion fraud by one man   [#permalink] 10 Feb 2008, 09:43
    Similar topics Author Replies Last post
Similar
Topics:
2 In the wake of a series of fraud convictions and guerrero25 3 01 Jun 2013, 13:18
3 Experts publish their posts in the topic Evaluate 2: Income Tax fraud egmat 12 10 Feb 2013, 22:18
The proposal to hire twelve new fraud investigators in cvsmech 5 08 Nov 2011, 17:10
Feel Like a Fraud? At Times, Maybe You Should Praetorian 0 30 Dec 2009, 14:31
Fraud in the financial industry that helped spur the crisis trader1 3 04 Apr 2009, 23:40
Display posts from previous: Sort by

The French Fraud King - $7.14 billion fraud by one man

  Question banks Downloads My Bookmarks Reviews Important topics  

Moderator: threestripes



GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.