Rogue Trader Says SocGen Looked the Other Way

Jérôme Kerviel, the trader at the root of the $7.1 billion scandal roiling French banking giant Société Générale, says his bosses knew what he was up to, and they didn't stop him as long as he was generating huge profits—$2 billion by the end of 2007, he claims.  "As long as my results were positive, my superiors closed their eyes to the methods and the sums involved," he tells authorities in an interrogation transcript excerpted by Der Spiegel. “It’s impossible to generate such profits by taking small positions.”

In the transcript, Kerviel says things got out of control at the end of  2007, when his gains had reached an unprecedented sum of undeclared cash for the bank.  "I was happy and proud of myself, but I didn't know how to justify it. Thus I decided not to declare it, and to hide the sum, I created an opposite fictional operation." He said the bank's risk management system didn't work because the bank ignored signals: "Because I was generating cash, the signals didn't worry them." (More Société Générale stories.)