Societe Generale Employee Confesses to Trading through Hacked Systems
Societe Generale, a major European bank, was in turmoil on January 24, 2008 when it revealed that a fraud employee had run a wave of fictitious transactions by hacking into the bank's server. The act resulted in over $7 Billion in losses for the bank.
Chairman and Chief Executive, Daniel Bouton, for Societe Generale, said that 31-year-old Jerome Kerviel has admitted doing the fraudulent act. However, Kerviel doesn't seem to have reaped any personal profit, he said. NYtimes published this on January 25, 2008.
Using his abundant computing expertise and the institution's internal knowledge gained over five years of employment in the compliance department of the bank, Mr. Kerviel allegedly clinched up to £60 Billion from illegal transactions, which cost the bank £3.7 Billion in losses.
Mr. Kerviel has created fake bank accounts to collect high bets being made on the stock markets. He was dragged into the office of the bank in La Defense at Paris where he was grilled overnight on January 19, 2008. At this point, losses for the bank were in the range of £1.2 Billion to £2 Billion. By the time the bank wound up to close Kerviel's alleged counterfeit accounts, the stock trading markets plunged resulting in an increased loss of £3.7 Billion.
It was apparent that the trader possessed a detailed knowledge of the procedures for control due to his earlier job in the intermediate office. He managed to hide these positions by employing a series of elaborate and fake transactions. Officials of the bank said that the trader was trying to flee though his lawyer called it untrue on January 24, 2008 adding that his client was planning to surrender himself to higher authorities.
Talking about Kerviel, Mr. Bouton said that his motives were totally irrational. He added that it didn't appear that Kerviel managed any benefit from the colossal trades he engaged in although investigations are essential.
Banking fraud and theft through web hacking is continuously increasing as the techniques for attack are becoming more advanced. In a similar bank hacking case, there had been a theft of $250,000 from the account of Kleberg County in November 2007.
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