SocGen's €4.9 Billion Nightmare: Inside the Rogue Trades That Nearly Broke a Banking Giant

Société Générale, one of Europe's largest banks, was caught in a financial disaster in 2008, reporting a staggering loss of €4.9 billion ($7.2 billion) due to a rogue trader, Jérôme Kerviel. This event became history's largest trading fraud loss and sent shockwaves through the global financial industry. It forced a reevaluation of risk management practices and internal controls across banking institutions. In this article, we'll break down the key details of the scandal, its aftermath, and the important lessons it left behind.

1. Jérôme Kerviel: The Man Behind the Scandal

Jérôme Kerviel, an ordinary trader, evaded the bank’s internal controls and rack up enormous losses. Despite being a junior-level employee, Kerviel had a deep understanding of how the bank's systems worked, having previously worked in compliance. This knowledge and boldness enabled him to take massive unauthorized positions on futures tied to European stock indexes. His reckless bets ultimately led to the enormous financial losses that rocked Société Générale.