The Rogue

Late last year Societe Generale, or SocGen, was rocked by a trading scandal. Now its head honcho has to step down.

Fifteen years ago, Daniel Bouton moved from the government’s finance office to SocGen’s executive suite. Since then he’s presided over remarkable growth as the bank grew five-fold. In the process, SocGen became an equity derivatives powerhouse, and the stock rose about 10% per year.

But their risk management systems didn’t keep up with their business growth. A low-level functionary figured out how to hack into the control system, and suddenly poof when 5 billion Euros.

Now SocGen is looking at replacing their whole management team. And the larger lesson here is that bad things can happen to good businesses. And the only way to avoid these losses is to diversify, or spread out your risk.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By |2014-09-03T18:24:28+00:00April 24th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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