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Yes exactly. Having worked for several big banks it is simply inconceivable that no one knew what this guy was doing. Which is probably why his immediate boss

by danssig 15y ago

Yes exactly. Having worked for several big banks it is simply inconceivable that no one knew what this guy was doing. Which is probably why his immediate boss resigned immediately after the police took him away.

deleted 15y ago
[deleted]
sek 15y ago
The same situation with Jerome Kerviel, he did this for a long time and nobody complained as long as he made Money.
morsch 15y ago
That's not exactly the point he is making, though: They’re not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys "rogue traders" when they make a billion dollars gambling. [...] In the financial press you're called a "rogue trader" if you're some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you're a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.
matwood 15y ago
immediate boss resigned The CEO should resign. Either the company lost $2B and is now pinning it on a 'rogue' trader or their security is flat out incompetent. Either way, all of the CxO positions should be tossed out. The whole things stinks really. $2B is A LOT of money to lose. With that sort of money flying around and the amount of power those involved likely have, it's easy to see them leveraging the criminal system to CYA and stick this to some underling.
- maxxxxx 15y ago
  If the guy had made 2 billion by accident the CEO would get credit for it and take a big bonus home. It again shows how messed up the system is. The big guys have all the upside but pretty much no downside.
- 0x12 15y ago
  $2B is a lot of money, indeed. But the trend to hand out large funds to be managed by relatively young people is one that will increase as the margins on the trades decrease. You need to use a lot of money to work with if you want to do arbitrage on a fraction of a percent for a couple of minutes to make more money than the operation itself costs. Not all trades are profitable. Also, losses like these are always a double failure of sorts. The trader is a given, but there is also an oversight problem.
- chollida1 15y ago
  > Either the company lost $2B and is now pinning it on a 'rogue' trader or their security is flat out incompetent. Either way, all of the CxO positions should be tossed out. That's a good point. Let me ask a serious question. What if some rogue google employee some how changed the search index so image searches always returned porn. Should Larry Page be fired? Both situations are cases where "security is flat out incompentent" is this about the lack of accountability or is this strictly about the loss of money?
  - matwood 15y ago
    I don't think those situations are analogous at all. Did the rogue trader lose $2B on a single action? This also isn't just about what the rogue trader did, but how long it took the bank to find out. Sure a rogue Google employee could change the index to only point at porn, but how long will that go unnoticed? I don't know Googles internal processes, but other than a select few people do they have relatively junior guys hot patching untested code directly into production? is this about the lack of accountability or is this strictly about the loss of money? It's about both really, and the amount of money is important. Stealing is stealing, but when implementing checks and balances I would assume they want to find situations that deviate too far from the norm. A million here or there in their type of business likely wouldn't have been noticed for awhile until a quarterly or yearly full audit had been done, but $2B? To me that shows hubris and incompetence, or compliance. Accountability comes into to play if the higher ups knew what was going on and let it fly because they had made or were hoping to make a lot of money off of the situation. It didn't pan out, so blame the trader and wash their hands of the it.
bd_at_rivenhill 15y ago
I disagree, these sort of losses are usually caused by failures in risk management systems or procedures. Nick Leeson was permitted to settle his own trades while being head of a trading desk (which is never a good idea), and Jerome Kerviel had previously worked in the middle office at Societe Generale and used his knowledge of their systems and procedures to hide his trades. Kweku Adoboli had previously been a trade support analyst (a middle office position) and UBS is currently undergoing a major restructuring of its risk management systems, so it wouldn't surprise me at all if he were able to circumvent their systems to escape detection. The universe seems to be telling us that middle office people shouldn't be moved to front office positions on a delta one desk.

by danssig 15y ago

deleted 15y ago

[deleted]

sek 15y ago

The same situation with Jerome Kerviel, he did this for a long time and nobody complained as long as he made Money.

morsch 15y ago

That's not exactly the point he is making, though: They’re not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys "rogue traders" when they make a billion dollars gambling. [...] In the financial press you're called a "rogue trader" if you're some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you're a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.

matwood 15y ago

immediate boss resigned The CEO should resign. Either the company lost $2B and is now pinning it on a 'rogue' trader or their security is flat out incompetent. Either way, all of the CxO positions should be tossed out. The whole things stinks really. $2B is A LOT of money to lose. With that sort of money flying around and the amount of power those involved likely have, it's easy to see them leveraging the criminal system to CYA and stick this to some underling.

maxxxxx 15y ago
If the guy had made 2 billion by accident the CEO would get credit for it and take a big bonus home. It again shows how messed up the system is. The big guys have all the upside but pretty much no downside.
0x12 15y ago
$2B is a lot of money, indeed. But the trend to hand out large funds to be managed by relatively young people is one that will increase as the margins on the trades decrease. You need to use a lot of money to work with if you want to do arbitrage on a fraction of a percent for a couple of minutes to make more money than the operation itself costs. Not all trades are profitable. Also, losses like these are always a double failure of sorts. The trader is a given, but there is also an oversight problem.
chollida1 15y ago
> Either the company lost $2B and is now pinning it on a 'rogue' trader or their security is flat out incompetent. Either way, all of the CxO positions should be tossed out. That's a good point. Let me ask a serious question. What if some rogue google employee some how changed the search index so image searches always returned porn. Should Larry Page be fired? Both situations are cases where "security is flat out incompentent" is this about the lack of accountability or is this strictly about the loss of money?
- matwood 15y ago
  I don't think those situations are analogous at all. Did the rogue trader lose $2B on a single action? This also isn't just about what the rogue trader did, but how long it took the bank to find out. Sure a rogue Google employee could change the index to only point at porn, but how long will that go unnoticed? I don't know Googles internal processes, but other than a select few people do they have relatively junior guys hot patching untested code directly into production? is this about the lack of accountability or is this strictly about the loss of money? It's about both really, and the amount of money is important. Stealing is stealing, but when implementing checks and balances I would assume they want to find situations that deviate too far from the norm. A million here or there in their type of business likely wouldn't have been noticed for awhile until a quarterly or yearly full audit had been done, but $2B? To me that shows hubris and incompetence, or compliance. Accountability comes into to play if the higher ups knew what was going on and let it fly because they had made or were hoping to make a lot of money off of the situation. It didn't pan out, so blame the trader and wash their hands of the it.

bd_at_rivenhill 15y ago

I disagree, these sort of losses are usually caused by failures in risk management systems or procedures. Nick Leeson was permitted to settle his own trades while being head of a trading desk (which is never a good idea), and Jerome Kerviel had previously worked in the middle office at Societe Generale and used his knowledge of their systems and procedures to hide his trades. Kweku Adoboli had previously been a trade support analyst (a middle office position) and UBS is currently undergoing a major restructuring of its risk management systems, so it wouldn't surprise me at all if he were able to circumvent their systems to escape detection. The universe seems to be telling us that middle office people shouldn't be moved to front office positions on a delta one desk.