Massive fraud hits French bank Societe Generale

| January 24, 2008 | 0 Comments

French bank Societe Generale has revealed a massive fraud today by a Paris-based trader, amounting to 4.9 billion euros ($7.1 billion; £3.7 billion).

The loss is likely to be the biggest ever perpetuated by a single trader, and is four times bigger than that perpetuated by Nick Leeson, which brought down Barings Bank in 1995.

Societe Generale also announced losses of over 2 billion euros due to the sub-prime mortgage crisis in the USA.

The French bank is now asking for more than 5.5 billion euros to offset the losses.

The fraud is not as big as that at Bank of Credit and Commerce International, which was hit by massive levels of operating fraud, leaving it with over $10 billion in losses and collapsed the BCCI in 1991.

While the fraudulent trader at SG has not been named, the company has stated that both the trader in question and his managers have all been fired.

Trading in SG shares were suspended, though the bank is not in any danger of collapse, and is still expected to post a profit of between 600-800 million euros on Feburary 21st.

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