Definition
Jérôme Kerviel is a French trader who was convicted in the 2008 Société Générale trading loss for breach of trust, forgery and unauthorized use of the bank’s computers, resulting in losses valued at €4.9 billion.
Jerome Kerviel
What is ‘Jerome Kerviel’
A trader for French securities firm Société Générale that was charged with losing more than $7 billion in company assets by conducting a series of unauthorized and false trades between 2006 and early 2008. When company managers discovered that Kerviel had conducted tens of billions of dollars’ worth of unauthorized trades, they rushed to close out the open positions (most of which were specialized equity arbitrage trades) and contain the extent of the fraud. Several of the trades were closed out with heavy losses due to a falling market at the time of sale.
Explaining ‘Jerome Kerviel’
Kerviel had several years’ experience in Société’s back office, and was well-versed in the company policies for approving and regulating trading among its brokers. Kerviel’s losses are yet another case study in rogue trading, despite all the modern regulations and technological advances designed to prevent such things from ever happening.
Kerviel was not considered a well-renowned trader by any extent; in fact, when the story broke many openly wondered how such a person could obtain the authority over such huge sums of capital without the company noticing. Kerviel hid his early gains by creating fake, offsetting trades in the system’s computers and logs. He had extensive knowledge of the computers and systems used in the company, which was essential to his trading scheme.
Further Reading
- Jérome Kerviel the'rogue trader'of Société Générale: Bad luck, bad apple, bad tree or bad orchard? – papers.ssrn.com [PDF]
- Behavioural patterns in rogue trading: Analysing the cases of Nick Leeson, Jérôme Kerviel and Kweku Adoboli—Part 1 – www.ingentaconnect.com [PDF]
- Behavioural patterns in rogue trading: Applying control balance theory to the rogue traders Nick Leeson, Jérôme Kerviel and Kweku Adoboli—Part 2 – www.ingentaconnect.com [PDF]
- Europe and the US: A Tale of Two Financial Crises – bruegel.org [PDF]
- THE MOVIE L'OUTSIDER AND THE STORY OF JÉRÔME KERVIEL: AN EXAMPLE OF CONTRIBUTION OF CINEMA TO AN ANTHROPOLOGY OF FINANCIAL … – econpapers.repec.org [PDF]
- Financial risk management: When does independence fail? – pubs.aeaweb.org [PDF]
- New plots are badly needed in finance: accounting for the financial crisis of 2007‐2010 – www.emerald.com [PDF]
- Do Traders Become Rogues? or Do Rogues Become Traders? The Om of Jerome and The Karma of Kerviel… – papers.ssrn.com [PDF]
