SocGen CEO quits over rogue trader

The plot thickens at Société Générale, the French bank that got into difficulties over a rogue trader. Daniel Bouton is stepping down as CEO, but moving to a more comfy seat as Chairman. There has been pressure on the top brass at the bank, especially from Nicolas Sarkozy, the French President, but also from investors.

M.Bouton claimed that the bank was hit by this rogue trading scandal all of a sudden. Implying it happened in more or less the same way as Hurrican Katrina or a giant tsunami. You get an early warning of sorts, but it's too late to do much about it in real terms. The Financial Times has been delving into all this. I get the feeling their journalists have picked up more info than they can properly impart. Scheherazade Daneshkhu reporting from Paris writes, "the decision to split Mr Bouton’s role comes only weeks in advance of a crucial report by the board’s crisis committee that one insider suggested to the Financial Times Thursday could have “severe” conclusions." Severe conclusions? Don't tempt us! Find out what they are please.

On the other side of the fence, so to speak, is the trader himself, now suing the bank. Jérôme Kerviel may have some financial facts that sit uneasily with all this. Who knows? The trouble is that banks have been less than transparent and now they are getting themselves into the blame game. A good shake-up is needed with proper (not over) regulation and a requirement that dodgy dealings are a thing of the past.

Rogue trader to sue Société Générale over sacking!

I thought as much. It wasn't as if he was going to go down for something he thought he hadn't done. After all, French jails are not much better than they were in Napoleon's days.

The truth is these banks, Société Générale in particular, were not as clean as they try to make out. It always amuses me to see Angela Knight for the British Bankers Association popping up on our screens telling as all about mortgages, etc, as if her members had just left a monastery! She should know better! After all, she was Economic Secretary to the Treasury from 1995 to 1997, in John Major's government. I bet she would have said something if the Northern Rock fiasco had been in her time.

These bankers and their rich customers! All using our money. Wow! After watching Robert Peston's excellent expose (Super Rich: the Greed Game) into their legalised money laundering antics, one wonders how they sleep at nights. Probably quite well!

Jerome Kerviel is now suing SocGen. He and his lawyers are basing their case on two points. The first is that Mr Kerviel’s massive gambles on markets were actually in the black when his bosses stepped in. The losses only occurred when SocGen sought to unwind his gambles. The second relates to a legal technicality. French labour laws force employers to hold face-to-face meetings with employees to outline the case for terminating their work contract. But, as Mr Kerviel’s lawyers point out, the meeting is impossible because Mr Kerviel’s bail conditions forbid him from entering into contact with SocGen staff. So, a possible stuffing for the bank?

Whatever Kerviel did or didn't do, the bosses at these banks know only too well that they either conveniently didn't ask questions or they knew and joined in the gamble. What they have never done, it seems, until recently, is put into place "robust systems" to stop these malpractices. Why kill the goose, eh?

We need tighter regulation in the field of share trading and bank lending. It's time to call a halt on self-regulation. Sorry, Angela, but your BBA proposals don't wash!