Imagine a major U.S. bank with a world-class equity derivatives trading practice; a "rogue" trader bypasses internal risk controls to place risky bets over the course of a few years. At first, the rogue trader earns accolades as his risky bets pay off. Over the course of a few months, the trader's fruits turn sour as his trades now earn the bank a $7.2 billion dollar loss. Aside from the direct and indirect economic loss, the bank becomes the subject of an international investigation, and becomes prey for takeover bids. The CEO of this bank, astonishingly, remains in his position while all this is ongoing.
This wouldnever happen in the U.S., of course. Shareholders would clamor for action and the board of directors would determine accountability. InFrance, however, things aredifferent. In the recent scandal at Société Générale ("SG"), the CEO in question, Mr. Daniel Bouton, offered to resign- an offerunanimously rejectedby the
Mr. Bouton and other managers may yet be held responsible for what has occured at SG. The investigation of the behavior is not solely the domain of French officials. In addition, published reports indicate thatthe SEC is involved. Perhaps with an outside regulator looking at the facts, there is a greater likelihood that the entire truth will be uncovered and the responsible parties identified.