Chapter 3

Case Study

Questions to consider 

1. Peter Gumble, European editor for Fortune magazine, comments, "Kerviel is a stunning example of a trader breaking the rules, but he's by no means alone. One of the dirty little secrets of trading floors around the world is that every so often, somebody is caught concealing a position and is quickly - and quietly - dismissed... [This] might be shocking for people unfamiliar with the macho, high-risk, high-reward culture of most trading floors, but consider this: the only way banks can tell who will turn into a good trader and who even the most junior traders to take aggressive positions. This leeway is supposed to be matched by careful controls, but clearly they aren't foolproof." What is your reaction to this statement by Mr. Gumble? 

2. What explanation can there be for the failure of SocGen's internal control system to detect Kerviel's transactions while Eurex detected many suspicious transactions?

Discussion Questions

1. Do you think that Mike Lynn acted in a responsible manner? Why or why not?

Mike Lynn acted disrespectfully, I understand his side but he should learn how to be private and learn how to limit his self from posting to the public.

2. Do you think that Cisco and ISS were right to pull the plug on Lynn's presentation at the Black Hat conference? Why or why not?

3. Outline a more reasonable approach toward communicating the flaw in the Cisco routers that would have a led to the problem being promptly addressed without stiring up animosity among the parties involved.