French trader loses $7 billion

Last week a French trader for one of France's primary banks, Societe Generale lost over $7 billion dollars. He had hacked into the system and was illegally trading huge amounts of money and reportedly was doing well at first but then began losing.

Here are two of many articles about what this guy did: http://www.msnbc.msn.com/id/22839323 and http://www.msnbc.msn.com/id/22867180/

The trader claims there is no way the bank could not have known about what he was doing, and that they never said anything so long as he was gaining money. However, once he started losing...he lost big.

Personally, it seems the timing between his losses (or at least their discovery of the losses) and the crash of the American economy and the resulting global economic instability must be in some way related. It is however questionable that just days before the bank announced this trader's "blunder" a member of the board of directors sold off $45 million and then another $85 million of his shares. Supposedly, to help compensate for the banks losses and their ensuing attempt to regain the money lost, the bank's director has generously offered to forgo his salary for 6 months. (a salary rumored to be 5 million euros per year).

There are also rumors of an OPA in the works by some of France's other banks. The French government however has promised this wont happen and that they will support Societe Generale to prevent a hostile takeover. However, some speculate how the government will be able to do this when already facing a multi-billion dollar financial deficit.

Needless to say, this will be something closely followed by those in both the financial and the legal world, and by students. Our professor for our class in white collar crime has asked us to follow this case as this trader is a classic example of the kind of people you would encounter in the world of "sophisticated" business crime. Classic example in every way except that he didn't make any money himself.

Will keep you all posted on how this case develops.

I wonder if this man, if he can avoid a prison sentence, or even after he serves time, will ever be able to find another job. Who would want to hire the man who is behind the one of the largest bank fraud in history?