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Author: Subject: $7.14 billion loss by French trader
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[*] Post 318194 posted on 27-1-2008 at 00:33 Reply With Quote
$7.14 billion loss by French trader



Times CNN link

This article has little information.:(

If fraud was involved, must the bank honor the trades?
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[*] Post 318213 posted on 27-1-2008 at 08:35 Reply With Quote


It couldn't afford not to, the damage it would do to the whole trading system would cause so much loss of faith.

Actually I'm not too happy with it being called fraud, although no doubt some geek will give me chapter and verse from the rule books, as the perpetrator of the actions hasn't gained himself. I think it's very much a re-run of the Nick Leeson affair that caused the collapse of Barings a few years back. A junior member of staff managed to bypass the checks and then couldn't get himself out of the position he found himself in and didn't have the guts to come clean but tried to continue trading his way out of trouble, making the same bad decisions that caused his problems in the first place.

This throws up all sorts of questions; do SG have a share of the blame as their checks weren't adequate? If the deals had been a success would the perpetrator still be considered a fraudster? Looking at the possible downside, as evidenced by these two perpetrators, do those successful traders actually earn the phenomenal money they earn?
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[*] Post 318240 posted on 27-1-2008 at 12:54 Reply With Quote


It becomes fraud, when he knowingly bypasses the security protocols. If he managed it by mistake, attempting to cover his mistake by continuing to try and trade his way out of trouble without putting up his hand and saying "I'm in trouble here" becomes fraud.

You are right, though, Simon, the bank could ill afford not to honour the trades.

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do SG have a share of the blame as their checks weren't adequate?
Yes!
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If the deals had been a success would the perpetrator still be considered a fraudster?
Interesting point, but, at law, yes. The question becomes "Would the bank choose to prosecute?" Sadly, I'd think, No!
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Looking at the possible downside, as evidenced by these two perpetrators, do those successful traders actually earn the phenomenal money they earn?
Yes, have you attempted to follow the markets? Stress, stress, and more stress. In case you haven't had enough stress, then the trading starts!
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