Jerome Kerviel Crushes Bank Societe Generale (Part4)

http://st0ckman.blogspot.com http://st0ckman.blogspot.com/search/label/$t0ckman's Pre-Market this will cost cost the group 4.9 billion euros ($7.16 billion) and announced plans to raise 5.5 billion euros through a capital increase to shore up its balance sheet, also reeling from a crisis in global credit markets. The fraud disclosure brought back memories of Nick Leeson, the British trader who in 1995 brought down blue-blooded merchant bank Barings after racking up huge losses. SocGen said it was in the process of dismissing the Paris-based trader, who it did not name, and added that the trader's managers would leave the company. It added that its board had rejected an offer by Chairman and Chief Executive Daniel Bouton to resign. SocGen shares were suspended. The Bank of France announced an inquiry by the Banking Commission and said no further comment was necessary after Societe Generale took steps to strengthen its balance sheet. French Economy Minister Christine Lagarde will make a statement during the day on the issue, her office said. "The most serious thing is that this puts into doubt the risk management systems at some banks," said Fortis analyst Carlos Garcia. A source at SocGen said the trader was "not one of its stars" and was relatively young. SocGen said the trader had been handling plain vanilla futures contracts on European stock market indices, betting on broad share market movements. It was not immediately clear what role French police were taking in the investigation. The French prosecutor's office was not available for comment. FURTHER WRITEDOWNS AT SOCGEN Analysts said the episode would have a major impact on the reputation of SocGen, which was founded in 1864 and is one of France's most prestigious blue-chip companies. Jerome Kerviel on the run!

YouTube | January 25, 2008

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