Jan. 29 (Bloomberg) — Societe Generale SA board member Robert Day and his foundations sold shares of the bank worth 45 million euros ($67 million) on Jan. 18, the day it said management discovered trading frauds costing 4.9 billion euros.
Jan. 29 (Bloomberg) — Societe Generale SA board member Robert Day and his foundations sold shares of the bank worth 45 million euros ($67 million) on Jan. 18, the day it said management discovered trading frauds costing 4.9 billion euros.
The article says he’d already sold 95 million Euros worth of stock earlier in the month, so this might be part of a planned sell-off unrelated to the “rouge trader” business. Still, it looks bad. I’m quite unfamilair with French insider trading law, however.
I wouldn’t jump to conclusions here. Not that I have any interest in defending SocGen. But among US public corporations many of these types of trades need to be planned and cleared in advance. This may, or may not, be the case in France. I do not know – I am merely warning against jumping to a conclusion based on what looks (on the surface) to be pretty ugly, but which may turn out to be no more than an unfortunate coincidence.
That said, I have strong doubts that the SocGen problem was limited to the acts of one trader.
My those guys are a caution, aren’t they? LM
FWIW, Day claims that he made the trades before the board was informed of the fraud. This needs investigation, but it is certainly possible. Also, most European insider trading laws are much looser than ours–some things that are illegal in the US are considered good business practice in other countries–which may in turn have stricter views on other things. (eg, when was the last time you heard of a European CEO presiding over losses and layoffs, and walking away with a multi-million dollar bonus?)
In an odd coincidence, George Soros got into legal trouble in France for alleged insider trading in Societe General early in this decade. Commenters generally agreed the insider trading laws are much looser in Europe. Of course, the ultimate “take the money and run” scandal in SocGen history is it’s founding: it was taken public by the French government in the 1980s, and lost nearly 97% of its market value within one year. C’est le vie.
I suspect that more than a few anti-government T19 commenters believe insider trading should be perfectly legal and unrestricted. They probably won’t say so on this thread. But it’s implicit in what they say elsewhere.
Andrew [#1]: I like the thought of a “rouge trader.” Perhaps Messrs. Kerviel and Day could trade rouge in their new jobs.
M Kerviel is a [i] rouge [/i] trader because they caught him red-handed. And his supervisors are certainly red-faced.
It is ironic that if he had merely stolen the money, the situation would be much better. They could at least recover some of it; it would be hard to spend the whole $7 billion. But to lose it in trading, [i] eh bien, c’est la vie. [/i]
Irenaeus– If you think I approve of insider trading, you’re quite wrong. I’m merely stating a fact about insider trading in other countries.
Wilfred [#8]: Kerviel and Day still need more rouge. They probably don’t have enough shame for their faces to redden naturally.
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In Newark [#9]: I did not have you in mind. I agree that your comment #4 is factual and in no way condones insider trading.
Following up on In Newark’s comment #4 about lax European insider trading laws, I’d note that laxity often reflects a past era in which corporate insiders could do largely as they pleased—and politicians and voters figured they’d do it anyway. I suspect that politicians and voters think differently now.