SocGen: Who Knew What, When?

As a further thought on the SocGen knave trader debacle revealed today, it puts the controversial and market-moving IHT article Friday in a different light. Because according to SocGen, it learned of its traders’ position problems on Friday the 19th, but told no-one outside the bank until Sunday.

Okay, now recall that in the first version of the IHT article published Friday that Bank of France Governor Christian Noyer was quoted as saying he was closely scrutinizing the balance sheets of banks like SocGen. And then sometime over the weekend the article was changed — without any acknowledgement of the edits — to delete mention of SocGen entirely.

Bets on what really happened here? A conspiracy theorist might argue that Noyer actually knew Friday about SocGen’s troubles, and let slip the SocGen info by accident to the IHT. It wouldn’t be the first time that regulators had market-moving information, only to handle it clumsily.

More likely, however, is that Noyer blithely named big bank names Friday, thinking nothing of it. But then the piece was read by panicky SocGen executives who knew what was really going on at their firm, and they demanded the IHT article be changed, taking their name out. They had to have have been reduced to near-quivering Jell-o status that the position news might leak out before they could finish unwinding trader Kevelier’s outsized bets.

Interesting stuff. And its gets even more interesting if you muse about whether the Fed learned about any of this through channels on Sunday as well. What did it know, and when?

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If you’re in the mood for more SocGen amusement, be sure to read the FT’s live blog of the company conference call from earlier today. Anarchy.

9.56 – Music, music. There’s noise in the background. There’s no official message to let you know where you are.  A chap from the BBC asks a female journalist with limited English whether he’s in the right place.  Patrick Hoskings from the Times also chimes in. “I don’t think there’s anyone official on this call,”  a mystery voice explains.  No one knows what’s going on – it’s chaos before the official call has even begun.

10.01 – “we’re all waiting,” explains one journo to two new arrivals to the conference call.  No sign of any official/SocGen action just yet.  Just half Europe’s financial media.

10.03 – very loud banging in the background. Someone makes a gag about a guillotine in action.

10.05 – we’re off – maybe – there’s vague sounds of something official in the background. There’s recorded message from a woman with terrible soft rock in the background, thanking us for our call on behalf of PriceWaterhouseCoopers.  So they have something to do with this shambles.

10.09 – give up and redial. Still the bleeding PwC woman, soft rock and frustrated journalists, complaining to whoever they can in the in the background.

10.12 – the chaos continues. They’re looking for our correspondent apparently. Starting to see how this bank managed to let an plain vanilla futures trader build up sufficiently vast positions to lose €5bn. They don’t seem to have mastered the basics of telecommunications.

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