Former SocGen trader rebukes management over unauthorised trades

A former origin trader at Societe Generale, who was dismissed by the French bank late last year following the discovery of unauthorised trades, has criticized his former employers, blaming them for failing to detect the trades in a timely manner.

Kavish Kataria, a former vice president at SocGen in Hong Kong, took to LinkedIn on Thursday to express his discontent, revealing that his employment was terminated with only seven days' pay and his bonus for the previous year withheld. Despite this, Kataria claimed that his trades had generated over $50 million in profit for the bank over eight months.

Kataria shifted blame onto SocGen's risk system, asserting that the responsibility for not identifying the trades should lie with management rather than with him. He refuted claims of a "technical glitch" or lack of awareness regarding his trades, stating that they were automatically booked into the system and reported daily to higher-ups in Hong Kong and Paris by the PL control team.

SocGen declined to comment on Kataria's statements.

Late last year, two traders based in Hong Kong left Societe Generale after the bank unearthed unauthorised bets made through options contracts tied to Indian stock-market indices, according to a source familiar with the matter.

While the trades did not exceed authorised trading limits and resulted in no losses, the bank's risk-management systems failed to detect them due to their daily morning-to-afternoon cycle, leaving no trace of any trades surpassing limits in the books.

In response, SocGen released a statement acknowledging a "one-off trading incident in 2023" that had no impact and necessitated appropriate corrective measures.

Improving risk controls has become a priority for Societe Generale, particularly in light of past failures such as the infamous 2008 incident involving "rogue trader" Jerome Kerviel, which led to losses totalling 4.9 billion euros.

SocGen is set to announce its first-quarter earnings on Friday.

(With Reuters inputs)