French bank cites lax management in losses
Investigators at Societe Generale said Friday that they suspected a former futures trader had help as he tried to cover up unauthorized positions that led to billions of dollars in losses at the French bank.
In two long-awaited reports, the investigators said the bank’s management failures and culture of risk-taking were partly to blame for failing to uncover the alleged fraud, which led to a loss of more than $7 billion.
“The trader’s hierarchy, constituting the first level of control, proved deficient in the supervision of his activities,” the board of directors said in a statement to shareholders that accompanied the reports.
It also said former trader Jerome Kerviel’s direct superior “lacked trading experience” and showed “an inappropriate degree of tolerance” for Kerviel’s trading activity.
The findings came in two separate internal reports -- one led by a committee of independent directors headed by former auto executive Jean-Martin Folz, the other by audit firm PriceWaterhouseCoopers.
The report from the directors said they had “discovered indications of internal collusion involving a trading assistant,” whom they declined to identify. They said they were unable to speak to the person because of an ongoing judicial probe, adding that it would be up to the court to confirm its suspicions.
They said they had, however, uncovered an e-mail that suggested the assistant must have known about the fake trades. The assistant’s complicity would have helped Kerviel avoid detection, the report said.
Previously, Societe Generale had said it believed that Kerviel acted alone.