That’s hogwash. SoGen must provide detailed information to the worldwide financial community on how such a staffer involved in “plain vanilla” trading was able to elude its controls for more than a year. SoGen has posted zip on its website about the big scandal.Reuters reports that Kerviel “ran rings around the bank’s sophisticated anti-fraud systems from a desk at headquarters.” Where were the adults keeping tabs on Kerviel? What has been done to prevent a repeat performance from another "rogue?"
The Wall Street Journal adds that SoGen's “unwinding” of its trader’s bad bets may have triggered the worldwide stock sell-off of Jan. 22. That panic selling led Federal Reserve Board chairman Ben Bernanke into slicing interest rates, a knee-jerk move that has received mixed reviews from Fed watchers. The Fed may have been “snookered” into cutting those rates, economist Lou Crandall told the WSJ.
SoGen has apologized to the French people via print ads, and its CEO Daniel Bouton has offered to resign. The board refused the resignation offer. It should re-think that turn-down.
Bouton calls Kerviel’s motivations for deceiving the bank “irrational.” That’s again not the point. The question remains how could Kerviel do his dirty work, and who was asleep at the switch at SoGen, a French institution chartered by Napoleon III in 1864?
