Jerome Kerviel

AAA

DEFINITION of 'Jerome Kerviel'

A trader for French securities firm Société Générale that was charged with losing more than $7 billion in company assets by conducting a series of unauthorized and false trades between 2006 and early 2008. When company managers discovered that Kerviel had conducted tens of billions of dollars' worth of unauthorized trades, they rushed to close out the open positions (most of which were specialized equity arbitrage trades) and contain the extent of the fraud. Several of the trades were closed out with heavy losses due to a falling market at the time of sale.

INVESTOPEDIA EXPLAINS 'Jerome Kerviel'

Kerviel had several years' experience in Société's back office, and was well-versed in the company policies for approving and regulating trading among its brokers. Kerviel's losses are yet another case study in rogue trading, despite all the modern regulations and technological advances designed to prevent such things from ever happening.

Kerviel was not considered a well-renowned trader by any extent; in fact, when the story broke many openly wondered how such a person could obtain the authority over such huge sums of capital without the company noticing. Kerviel hid his early gains by creating fake, offsetting trades in the system's computers and logs. He had extensive knowledge of the computers and systems used in the company, which was essential to his trading scheme.

RELATED TERMS
  1. Short Selling

    The sale of a security that is not owned by the seller, or that ...
  2. Ivan Boesky

    An American stock trader known for his role in a 1986 Wall Street ...
  3. Nick Leeson

    A former manager with England's Barings Bank, Leeson became a ...
  4. Market Arbitrage

    Purchasing and selling the same security at the same time in ...
  5. Broker-Dealer

    A person or firm in the business of buying and selling securities, ...
  6. Rogue Trader

    A trader who acts independently of others - and, typically, recklessly ...
Related Articles
  1. The Biggest Stock Scams Of All Time
    Investing

    The Biggest Stock Scams Of All Time

  2. Who set the record loss for
    Investing

    Who set the record loss for "rogue traders"?

  3. Canary Capital Partners: Anatomy Of ...
    Mutual Funds & ETFs

    Canary Capital Partners: Anatomy Of ...

  4. Trading's 6 Biggest Losers
    Options & Futures

    Trading's 6 Biggest Losers

comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center