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. Investing

    The Biggest Stock Scams Of All Time

    Where there is money, there are swindlers. Protect yourself by learning how investors have been betrayed in the past.
  2. Investing

    Who set the record loss for "rogue traders"?

    Every trader wants to set a record, but the hope is that it will be a record profit rather than a loss. With losses topping out at $7.1 billion, Jerome Kerviel better than tripled the trading ...
  3. Mutual Funds & ETFs

    Canary Capital Partners: Anatomy Of A Scandal

    Learn how a hedge fund scammed its way to profits and caught investors off-guard.
  4. Options & Futures

    Trading's 6 Biggest Losers

    These "rogue traders" are famous for their billion-dollar mistakes.
  5. Investing Basics

    The Most Popular Bitcoin Mining Software

    Success at mining bitcoins depends on the combination of time, knowledge, computer hardware and the complementary software.
  6. Mutual Funds & ETFs

    What is the difference between a hedge fund and a private equity fund?

    Learn the primary differences between hedge funds and private equity funds, both of which are utilized by high net worth investors.
  7. Mutual Funds & ETFs

    How do hedge funds determine what assets to own?

    Learn about the various types of investments that hedge fund managers use, and explore basic hedge fund management trading strategies.
  8. With stocks surging, financial advisers and their wealthy clients are asking why they should continue to bother with poorly performing alternatives.
    Professionals

    Are Advisors Off Alternatives?

    With stocks surging, financial advisers and their wealthy clients are asking why they should continue to bother with poorly performing alternatives.
  9. Mutual Funds & ETFs

    Where does a hedge fund get its money?

    Learn how a hedge fund is structured and how the managing partner of the fund goes about the process of finding and soliciting investors.
  10. Mutual Funds & ETFs

    What is the purpose of a hedge fund?

    Find out what a hedge fund is, how it is set up and why it is different than other forms of investment partnerships like mutual funds.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center