Friday, January 28, 2011

Société Générale (A): The Rogue Trader
© 2011 INSEAD Case Study
Also available: Teaching Note

In January 2008, Société Générale, revealed that trader Jerome Kerviel had exposed the bank to 50 billion euros in apparently unhedged and unauthorized trades, resulting in 4.9 billion euros of losses when his positions were unwound. This case provides an opportunity to explore the motivations underlying Kerviel's conduct and the failure of the bank's internal controls as well as other organizational and sociological factors in this incident and the broader 2008 financial crisis.

Pedagogical Objectives: 1. To explore the motivations underlying individual unethical conduct?including, specifically, the motivations of "rogue traders" and the role of rationalisations used by individuals to attempt to justify their unethical conduct. 2. To examine the role of organisational factors in facilitating or constraining unethical conduct. 3. To explore the strengths and weaknesses of compliance and control systems intended to prevent individual unethical conduct and rogue traders more specifically. 4. To consider arguments that, in part, attribute the 2008 financial crisis to the role of banks in encouraging high risk behaviour by traders.