Financial WMDs

Societe Generale said today that a single trader who fooled his bosses carried out a massive 4.9 billion euro ($7.15 billion) fraud -- one of the biggest in financial history. Trading in the bank's shares was temporarily suspended but fell 5% after they resumed because of the fraud and a 2.05 billion euro loss in the US subprime mortgage market. The bank said it needed a 5.5 billion euros capital increase to restore its balance sheet. Chairman Daniel Bouton said the unnamed rogue trader had used "extremely sophisticated and varied techniques" to carry out "fraud of a considerable scope." The trader, based in Paris, is believed to have built up the huge losses gambling on share futures. The bank said the trader took out "massive fraudulent directional positions in 2007 and 2008 beyond his limited authority." The case dwarfs that of Nick Leeson, the original British "rogue trader" who lost $1.5 billion at Barings, causing the failure of the venerable British bank in 1995. (Source: AFP)