Smoke and Mirrors and $7.1 Billion

The New York Times reports today on a trader at the French bank Société Générale who defrauded his employer to the tune of $7.1 billion. Described by the bank’s chairman as “an imprudent employee in the corporate and investment banking division,” the trader’s “whereabouts are unknown.” By comparison, the infamous Nick Leeson case involved a loss of *only* $1.8 billion (but those were 1995 dollars). How can a fraud of this magnitude be perpetrated? What measures do financial institutions take to try to prevent such offenses? Some answers may be found in Cornell’s Smoke & Mirrors, Inc.: Accounting for Capitalism, by Nicolas Véron. Raghuram Rajan, Economic Counselor and Director of Research, International Monetary Fund, said of this book: “ Smoke & Mirrors, Inc., is an intriguing introduction to the use and abuse of accounting in the modern capitalist enterprise. It is a must-read for students, investors, regulators, and anyone interested in understanding the shenanigans behind recent corporate scandals.”

Fraud Costs French Bank $7.1 Billion

Smoke and Mirrors and $7.1 Billion