How to Lose $7.2 Billion: A Trader’s Tale

Quite a few interesting details in this article, an excerpt:

Mr. Kerviel arrived at the bank around 7 p.m. on the night of Jan. 19 … At the beginning, he was questioned about a single trade that had been discovered the evening before and aroused concern: a transaction with a German brokerage house that had seemingly lost the bank €1.5 billion ($2.22 billion).

Grilled late into the night at Société Générale’s headquarters, Mr. Kerviel acknowledged that the trade with Deutsche Bank never existed and then revealed far more disturbing news: his books contained genuine trades that exposed the bank to a €50 billion risk.

Mr. Mustier entrusted one of his best traders with the task of unwinding the bets. The result, by the time the information was released to the public on Jan. 24, was a loss of $7.2 billion — the largest single trading hit in banking history.”

Bingo! Minus 4,900,000,000 euros. The trader given the task of exiting that monster with minimal damage has my utmost sympathy — from one bald man to another: Mes condoléances.