Société Générale Fraud: A Timeline of Events by Wall Street & Technology

Société Générale Fraud: A Timeline of Events by Wall Street & Technology

Société Générale Fraud: A Timeline of Events The Société Générale fraud began to surface in 2007 when junior trader Jerome Kerviel’s losses started to materialize. By Melanie Rodier Wall Street & Technology February 12, 2008 Société Générale junior trader Jerome Kerviel started building up large positions in 2007. As his losses accumulated, he covered up his positions by hacking into the bank's risk management system. Below is a timeline of the events in mid-January 2008 that lead to the discovery of Kerviel's fraudulent activities: Jan. 18: A compliance officer notices a trade that has breached one of the bank's thresholds. The officer telephones another brokerage, with which Soc Gen had apparently made the trade, and is told that the firm has no record of this transaction ever taking place. Jan. 19 & 20: Over the weekend, Soc Gen management starts investigating suspicious trades that all are traced back to Kerviel. Jan. 20: Kerviel is questioned by the Soc Gen board. Jan. 20: Soc Gen Chairman Daniel Bouton informs the Governor of the Bank of France and the head of France's AMF stock market authority of the situation. Jan. 21: On Monday, Soc Gen management decides to close Kerviel's positions. Equity markets plunge, with many stock indexes suffering their worst one-day close since Sept. 11, 2001. Jan. 22: The U.S. Federal Reserve announces an emergency interest rate cut. While many pointed the finger at the Soc Gen trades for triggering the cut, the Fed later says it was unaware of the Soc Gen rogue trader situation when it made its decision to slash rates to 3.5 percent. Jan. 24: Soc Gen issues a statement saying it has uncovered a US$7.14 billion fraud at the bank, the biggest loss ever recorded in the financial industry by a single trader.