http://www.hojohnlee.com/weblog/archives/2008/01/24/jerome-kerviels-not-so-excellent-adventure-in-the-futures-market/ Fri, 21 Nov 2008 10:16:14 +0000 http://wordpress.org/?v=1.5.2 http://www.hojohnlee.com/weblog/archives/2008/01/24/jerome-kerviels-not-so-excellent-adventure-in-the-futures-market/#comment-664629 Sun, 27 Jan 2008 01:13:31 +0000 http://www.hojohnlee.com/weblog/archives/2008/01/24/jerome-kerviels-not-so-excellent-adventure-in-the-futures-market/#comment-664629 It seems so unlikely that one guy could have done this. Maybe the bank set him up as a scape goat for their real sub-prime or other losses. It seems so unlikely that one guy could have done this. Maybe the bank set him up as a scape goat for their real sub-prime or other losses.

]]> http://www.hojohnlee.com/weblog/archives/2008/01/24/jerome-kerviels-not-so-excellent-adventure-in-the-futures-market/#comment-663180 Sat, 26 Jan 2008 00:56:24 +0000 http://www.hojohnlee.com/weblog/archives/2008/01/24/jerome-kerviels-not-so-excellent-adventure-in-the-futures-market/#comment-663180 J. Kerviel was by no means a financial genius. He traded delta one products, which are the simplest on the market. He worked for a very large bank (120 000 employees) and he was very minor there. He had experience in back office and changed positions to front office. He kept the passwords from back office (the bank should have been more secure) and used these to make it look like he was taking positions on behalf of non-existent clients. Risk management would not have picked up that the bank was not neutral (his positions being non-covered) because of this. Because of losses due to margin calls he then increased his positions, hoping to recupe the money (this is terrible trading). He would not have gained anything from this. If anything he was a bad trader and also a rogue. This could have happened in many banks. They all work more or less in the exact same way. The bank and the trader both share blame. J. Kerviel was by no means a financial genius. He traded delta one products, which are the simplest on the market. He worked for a very large bank (120 000 employees) and he was very minor there. He had experience in back office and changed positions to front office. He kept the passwords from back office (the bank should have been more secure) and used these to make it look like he was taking positions on behalf of non-existent clients. Risk management would not have picked up that the bank was not neutral (his positions being non-covered) because of this. Because of losses due to margin calls he then increased his positions, hoping to recupe the money (this is terrible trading). He would not have gained anything from this. If anything he was a bad trader and also a rogue. This could have happened in many banks. They all work more or less in the exact same way. The bank and the trader both share blame.

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