Group members:

• Imran Ullah Wazir

• M.Qasim

• Abd Ullah Jan

• Presentation topic :

• Jerom Kerviel :Rogue Trader

Founded in 1864

Core Businesses:Corporate + Investment Banking

Global Investment Services

Over 130000 employeesFrom 114 different nations

Conti….

customers:19.2billion individual customers in 76 countries.

The CEOs of the bank are

Philippe Cirtrrneand

Daniel Bouton.

Who is Jerome Kerviel?

1. Name: Jerome Kerviel

Age : 31 years

Education: Masters of Finance, University of Lyon

Starting Position: Risk Management Office

•Ending Position: Lower-level trader.

Co-workers’ impressions:•Quiet And unassuming trader.

•Unimpressive education background.

• motive to impress his seniors.

• Job Goal: Create small, low-risk profit stream based on Large volume.

. What Kerviel Actually Did?

• Bypassed all internal controls and made high risk unauthorized trades for a total of $87 billion in trades.

• Purchased of 140,000 DAX(german stock index)

• He exceeded the company overall market cap of 52.6 billion.

• He bypassed controls by creating fictitious trades in “trading book” to offset his trades.

HOW DID HE BYPASS CONTROLS:

• Learnt internal controls in starting position in

back-office.

• Exactly knew the internal checking schedule and

removed all false transaction in books minutes

before check.

• Used other employees passwords.

• Took minimum vacation days.

Is Supervisor Know about him?

• Supervisors ignored over 75 trade errors.

• Reward his behavior with a proposed bones of $440,000.

Company Reaction

• After the fraud deduction of 7.14 billion.

• Socgen immediately report to the French central Bank.

• Kerviel Employment was terminated along with his supervisors.

• Both the CEOs submitted a formal resignation .

• ON 25 JAN 2008 SOCGEN took out a full page newspaper article apologizing to its customers for scandal.

.30 Jan board announced the formation of independent committee to investigate the case.

Govt Reaction

• On Jan 26 kerviel was taken into police custody.

• The French president state that to the boards of directors to take action senior management including bouton.

• On Jan 28 kerviel were charged with unauthorized computer activity and breach of trust.

• Management | Organization | Technology

– Unauthorized Access

– Internal Control Breach

– Managers’ failure to identify key errors

• Kerviel’s ethical misconduct

• Failure of internal controls

• Management and Supervisors

• IT Audit Controls