We are starting to see the fallout from the actions of a rogue trader , Jérôme Kerviel, in France who lost $7 billion of bank Société Générale’s money. Bank officials insist that this rogue trader acted on his own. The bank’s investors aren’t so sure. I don’t see what difference it makes. Huge bets were made that put all of the bank’s assets at risk. What difference does it make whether Kerviel acted alone or not? Either the bank officials are guilty of authorizing these huge bets or they are guilty of running a bank with such lax safeguards that a junior trader could put all the bank’s assets at risk. The end result is the same for the bank’s investors: they could have lost much more money, and the bank officials are to blame. Even if these bets had made money, instead of losing $7 billion, bank officials would deserve to be held accountable for taking unwarranted wild risks. If it turns out that Kerviel made fraudulent trades, he would deserve to be punished. But this p...

A rogue trader working for a bank has managed to lose a record $7 billion making unauthorized trades. The trader, Jérôme Kerviel, worked at the bank Société Générale in France. He lost the money trading in the European stock index futures market. Stock index futures are essentially side bets between two parties on whether the stock market will go up or down. This rogue trader made about $40 billion in bets that the stock market would go up, and as we have seen over the last week, those bets didn’t work out very well. When the bank discovered the huge bets, they sold them off quickly and ultimately lost $7 billion in the process. There have been many stories about rogue traders over the years. One thing all the stories have in common is huge losses. Don’t these rogue traders ever get lucky and make money? My guess is that many of them do make money, at least for a while. What would bank management do if they discovered a rogue trader who risked billions, but had made a bill...