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A Rogue Trader?
The $7.2 billion fraud at France's SocGen, the world's leading equity derivative trading house, is breathtaking.
But I'm skeptical about the claim that its was all the work of one "genius". And, if it was, we should all worry even more about the risks of derivatives.
According to the Financial Times, SoGen "quickly unwound the positions he had amassed," estimated at 40 billion to 60 billion Euros. Okay, so where did he get the money? That's a huge position. He financed that much--and the bank didn't notice? How much else is out there that isn't being monitored, watched, or understood?
About the author
Christopher Farrell is economics editor of Marketplace Money, a nationally syndicated one-hour weekly personal finance show produced by American Public Media.
Can you explain the possible or direct relationship behind The Fed's 3/4 cut as a reaction to the SoGen scandal? They knew of the SoGen situation, then they cut rates, then we find out about SoGen, is that the turn of events? How does our US Fed cutting rates cushion the European SoGen fall?
