All I could think about when I read this article was ‘ouch’.  If it was $7m, I probably wouldn’t have thought too much about it (yeah I know, that sounds horrible), but $7b… not only is that a major financial dent, but think about how that will damage this bank’s reputation.  Heck, if I knew my bank lost over $7b to a single scam artist, I would want to change banks.  Granted, even though my money is FDIC insured, just the idea of keeping it with a bank that gets scammed that severely just makes me want to question the security of my money…

Société Générale, one of the largest banks in Europe, was thrown into turmoil Thursday after it disclosed that a rogue employee executed a series of “elaborate, fictitious transactions” that cost the bank more than $7 billion, the biggest loss ever recorded by a single trader.

Daniel Bouton, Société Générale’s chairman and chief executive, said the employee, later identified by other bank employees as Jérôme Kerviel, had confessed to the fraud, although he did not appear to have profited personally from the trades. The bank has started legal proceedings against the employee, whom Christian Noyer, the governor of the Bank of France, said was “on the run.”

Mr. Kerviel could not be reached for comment.

Before discovering the fraud, Société Générale had been preparing to announce pretax profit for 2007 of 5.5 billion euros, or $8.07 billion, figures that Mr. Bouton said would have demonstrated “our capacity to absorb a very grave crisis.”[more]

Tags: Scams