Fake Hedge Fund Client Hid Rogue SocGen Trader’s Moves

Jun 17 2010 | 12:09pm ET

A phony hedge fund client helped rouge trader Jerome Kerviel bring Société Générale to the brink of collapse two years ago, he told a Paris court this week.

When Moussa Bakir at SocGen brokerage Fimat asked Kerviel about his trades, Kerviel said a hedge fund manager named “Matt” was pushing him to do so.

“I told him a fib,” Kerviel testified, explaining that Bakir “wanted to know what my underlying strategy was.” He told the broker that “Matt” was determined to make a €1 billion profit, adding color to his invention by noting that he was a big rugby fan.

Kerviel’s other falsifications seem to have lacked that finesse. He admitted today to creating bogus transactions and e-mails, as well as entering false information into SocGen’s computer system. Even Kerviel was shocked that these ham-handed efforts fooled his superiors.

“The explanation was not credible,” he said.

Kerviel faces up to five years in prison if convicted of breach of trust, computer abuse and forgery. His trades, designed to earn “Matt” €1 billion, actually cost SocGen €4.9 billion.


In Depth

Q&A: Filippo Pignatti Morano On The Ultimate Alternative Investment...Classic Cars

Jan 29 2015 | 12:37pm ET

In 2011, Filippo Pignatti Morano launched a fund to invest in classic cars. FINalternatives...

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note