SocGen is to be commended for making so much material generally available, since the report provides invaluable “lessons learned” for the rest of us.
The Mission Green Summary Report begins with a description of Kerviel’s fraudulent activities. It describes how he:
- concealed market risks by entering and canceling false transactions
- hid realized earnings by entering pairs of fictitious transactions
- booked “intra-month provisions” to temporarily cancel earnings
- posted fictitious or unwarranted trades via the Front Office computer system, and
- lied to superiors and control bodies using forged emails (see Ken Belva’s post dated January 30, 2008)
Regarding responsibility and enforcement of policy, the report notes that management:
- did not catch the concealing of fraudulent trades
- tolerated intraday directional positions unrelated to Kerviel’s job assignment
- did not provide first-level supervision after the trading desk lost its manager
- replaced the desk manager with someone who was weak, and
- did not respond to several alert signals
The report mentions possible complicity of a trading assistant and awareness by management, but states that it has not confirmed these possibilities.
Since this was being discussed at an information security conference, the liveliest discussions related to whether infosec had any responsibility for this debacle.
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