Case study: Jerome Kerviel & SG

All his fault?

“I only wanted to be a good employee who generated as much profit as possible for his
employer. I was merely a small cog in the machine -- and now I'm suddenly supposedly the
main person responsible for the financial crisis.”
How did you end up having several billion euros to play around with?
Kerviel: My supervisors had deactivated the system of alerts. If I had wanted to, I could have
even invested €100 billion in a single day. My bosses removed all the safeguards off my
computer.
Kerviel: “I only employed methods that had already existed in the bank and that I learned
there. I didn't make anything up; other traders were trading in a similar way. I only had to
make sure that, when evening came, it looked like the trading limits had been observed. …
The internal monitors saw that I didn't have any trading partners for these hedges, but no
one ever said a thing.” (Der Spiegel, 2010)

- “weak oversight allowed a relatively junior employee to place bets worth more
than the bank's entire capital. Although SocGen has since spent €130m tightening
its controls, Britain's Financial Services Authority fined the bank in August for
weaknesses in its record-keeping and reporting.” (The Economist, 2010)

Requirement:
Listen to Inside story: Jerome Kerviel villain or victim?
https://www.youtube.com/watch?v=Vf06zZiKvc0&t=738s

Class activity: Turn, pair, share:

- For each of the three people interviewed: what is their view of the Kerviel case?
- What is being said about controls at Société Générale?
- What do we learn about control from this case? What type of controls were in place
(action, results, people)?