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I’m sorry, but that such a junior person singlehandedly managed to establish binding trading positions in the name of the bank in excess of $70 billion demonstrates that SoGen’s system of internal controls is a giant joke, and a failure across the entire spectrum of segregation of duties, independent checks, the authorization, approval and documentation of transactions in the name of the bank and managerial oversight.

Here's a tip, Sir John. It's been just that way for years with SocGen. They've been considered largely a joke among other major banks for at least a decade, esp. in forex trading.

Granted, this fiasco took place not in forex, but(allegedly) in equity hedging, which is usually such a simple activity that it can easily be taught to a fifth-former in a couple of weeks' time. Makes the point rather more forcefully, given that, now doesn't it? ;^)

Bottom line: 2/3rds or more of SocGen's public ''explanation'' is plain merde; good old American crapola, in English -- except this time it's French crapola. Their tale is plausible enough, but crediting a junior trader with more computer expertise than Q, Vic Haghani, Ned Irons, and James Bond wrapped all together is just a bit, er, shall we say, less than credible.

footnote: Haghani was one of LTCM's lead traders, as well as a heavyweight computer boffin (well, for finance, anyway). Edward N. ''Ned'' Irons is arguably the most brilliant computer scientist of the last 40 years, now involved in the 'Natural Language' project, and, with Pete Weiner, the co-inventor of both the original C-prompt in 1967 and the first multiuser multitasking minicomputer operating system in the early 1970s.

I’m sorry, but that such a junior person singlehandedly managed to establish binding trading positions in the name of the bank in excess of $70 billion demonstrates that SoGen’s system of internal controls is a giant joke, and a failure across the entire spectrum of segregation of duties, independent checks, the authorization, approval and documentation of transactions in the name of the bank and managerial oversight.

I agree that their are some serious shortcomings, to say the least, :=) with the company's internal controls. Apparently, this guy wasn't all that junior and was something of a computer whiz. Still, that level of sloppiness is inexcusable.

The trade value that he set up was something on the order of $3 billion. The losses ballooned to about $7 billion as the company unwound the positions into a market that was already dropping. As I understand it, their trades exacerbated the drop, increasing their losses.