idealpeople blog

We’ve talked before about the scary stuff that can happen if you employ a weak or flawed hiring strategy, and we’d be nuts not to suggest that bolting in third party support from a trusted, reputable talent broker is the best solution. But sometimes really crazy stuff supporting this case plays out in the real world, and with devastating effect.

What we are talking about here is how Software Engineer turned Gambler, turned middle office systems guy lost Société Générale $7.2 billion dollars, or if you prefer, €4.9 billion…

Seven Point Two Billion Dollars.

Ouch.

To put this in perspective, that’s more than four times more than Nick Leeson.

Notorious Nick, the infamous Rogue Trader, managed to lose his now defunct employer a mere £800m, resulting in the collapse of Baring’s Bank in 1995.

It’s being reported that this latest Rogue Trader, Jerome Kerviel, learned how to manipulate the systems some years ago, through exposure to the banks middle office systems.

It’s alleged in a report in the Guardian that he used this knowledge to de-limit precautionary ‘gamble size’ restrictions when his role evolved to taking positions and trades, which were often against the banks senior traders positions as a ‘hedging’ measure, ironically – to control risk.

Incredibly – despite this, SocGen seems to be about to post strong results and has been keen to describe the outcome as “isolated and exceptional”. Nonetheless, it seems they are steeling themselves for a good deal of fire fighting.

To conclude – be careful who and how you hire. We aren’t sure yet what Jerome’s route was into the job at the bank, but wonder what diligence was carried out before the offer of employment was issued. We can only speculate.

It’s not to say that a poor show of recruiting led to this guy messing up (he messed up many years after joining the bank), but the scale of this sure is scary and every hiring decision should be made with a perfectly sewn up approach, including tight reference checking.