New Arrest in SocGen Trading Scandal
March 12th, 2008Kerviel, according to legend, entered fictitious hedge positions that tricked the bank’s risk exposure system into ignoring the real positions!?
If the people behind this had bombed the bank’s headquarters into a pile of rubble and killed all the executives, they would have done far less damage than what was accomplished with this hack. Or, this is a smoke screen being used to try to hide even more unthinkable financial horrors.
The piece also says that Kerviel, “misappropriated other people’s computer access codes.”
Two factor authentication has been standard in the finance industry for years. Simply: Two different authentication methods are required for access to critical systems. Access is only granted when a user supplies his or her credentials (username and password) ALONG WITH some other security token, usually a cryptographic security token that is displayed on a small device. (Biometrics are an option for the other factor.) The cryptographic signature changes every several seconds. It is synced with the server that is providing authentication. The token is usable only once, and within a very narrow time window.
In other words, when they’re saying that Kerviel, “misappropriated other people’s computer access codes,” did he go around and ask to borrow their one-time-pass cryptographic token generators, as well as their usernames and passwords?
I really don’t know what this situation at Societe Generale represents, but I can tell that it’s not the work of one man.
No way.
—French Bank Says Trader Hacked Computers
Like I said: No way.
Via: Reuters:
Police arrested another employee of Societe Generale on Wednesday as they probe the world’s biggest rogue trading scandal, Paris prosecutors said.
In January, France’s second-biggest listed bank SocGen unveiled 4.9 billion euros ($7.53 billion) of losses which it blamed on rogue deals carried out by Jerome Kerviel, a 31-year old junior trader at the bank.
The losses have made SocGen a possible bid target.
The Paris prosecutor’s office identified the latest person being held as a trader from a subsidiary of SocGen.
A source close to the matter said the person being held works for SG Securities, the bank’s share brokerage arm.
SocGen declined to identify the person or the division.
A spokeswoman for the bank said police had searched SocGen’s trading room at its glass-fronted headquarters in the Le Defense financial district on Wednesday.
She confirmed one person was being held for questioning.
Kerviel has been placed under investigation for breach of trust, computer abuse and falsification. He is being held in a Paris prison after a decision to grant bail was overturned.
The fresh arrest comes ahead of a hearing on Friday on whether Kerviel should remain in custody.
Sheesh, I wonder if Kerviel was given the French bidet treatment (back door waterboarding ) to make him sing out:
“I am not the Lone Ranger!”