Financial: SocGen risk management inadequate, says minister: Eight areas of controls that failed are identified: Report says bank did not cause global share sell-off

• Published in: The Guardian (London)
• Main Author: Angelique Chrisafis, Paris and David Gow, Brussels
• Format: Newspaper Article
• Language: English
• Published: London (UK) Guardian News & Media Limited 05.02.2008
• ISSN: 0261-3077

SocGen said the [Christine Lagarde] report "does not call into question the systems used to manage market risk" and insisted that measures which "would have enabled its [the fraud's] detection and prevention have already been implemented or will be put in place shortly". These include how SocGen responded to alarms raised by the Eurex derivatives market in late November 2007, the security of its IT systems and protection of log-ins, confirmation of all transactions with all counter-parties, respect of "Chinese walls" between front and back offices, monitoring of cancellations and changes in trades coming from a single trader, and "atypical" behaviour such as failure to take holidays. Lagarde later reiterated the government's support for a friendly merger, as SocGen sources poured scorn on suggestions that shareholders, including hedge funds, were pushing for accepting a takeover. "Investors will not vote in favour at the price levels in the market," they said.