No restrictions because he was in arbitrage. He did trade one in portfolio 1 and had to build an opposite position in portfolio 2. Sum = 0 or just a few base points profit. You have to do this in large positions to make the profit worth it. A billion in long position isn’t much if you take a billion in short position and make 10,000. Quite dull to do. What he did was trade one for portfolio 1 and then fake trade two for portfolio 2. Their internal systems showed a position of nearly 0 but in the market only trade 1 existed so his exposure built and built. Despite SocGens explanation… how this got through unnoticed at all is beyond me. Doesn’t make sense.
FYI - in Wikipedia, Jerome Kerviel is already listed under “Famous Stock Brokers”…I am so not even kidding… http://en.wikipedia.org/wiki/Stock_broker
tradewiz Wrote: ------------------------------------------------------- > funny how FED cut 75 basis point because of a > french rouge trader. Those rouge traders can be really dangerous. They are way more clever than lipstick traders and meaner than blush traders.
funny how good traders making big bucks are famous and how bad traders losing loads of $$ are even more famous
This trader got 300K€ last year as bonus because he made very good € last year doing the same things at SGAM (Société Générale Asset Management). It appears that what happened was kind of “common practice”… on a normal day the loss would have been much smaller but the managers at SGAM sold off all the position promptly… Now they are trying to use him as an escape goat for other various losses (subprime but not only) Also you may be aware that SGAM executive director (his name is Daniel Bouton) is being heard for money laundering. We are all wondering why Bouton is not fired yet, even Sarcozy (french president) asked for Bouton to take his responsibilities
Joey, That line about the reading yahoo.mail at work is just perfect!!! HA ha ha Willy
I couldn’t help but noticing the lack of Sovereign Wealth Funds stepping in to snap up SoGen as was the case for C, M and UBS. Willy