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Assuming all of this, there are several classical ways he could have hidden what he was up to armed only with VBA, Walkenbach and the right passwords. Marking trades as having been done by someone else is the most obvious, yet not entirely trivial to stop. A critical requirement of trading systems is to allow others to handle your position when you are off sick or on holiday, creating a set of vulnerabilities. My information is that he may have exploited this, and avoided being away from the office in a way quite atypical for French workers to avoid being caught.

London firms have a rule that one is supposed to take a block of at least two weeks every year, but it's hardly enforced, and of course US workers hardly get any annual leave at all. SG is known to use SunGard risk management software; but as with all such systems, if you have the right passwords you can make it say what you want. SunGard is much like other risk systems - basically a big expensive reporting tool. It cannot stop you making trades, and although it is technically possible to hook up risk to trading systems to physically halt trading, I've never heard of this being applied across a bank because of the pain it would cause. So Kerviel's claim that other traders also broke their limits is entirely credible, since even the most careful traders accidentally do this occasionally, and of course admit to "temporarily" stepping over these boundaries.

His other claim that his bosses knew also makes some sense since they will have received limit reports, but in the blizzard of tick-box generated reports that infest banks, they may have missed it. However, it defies belief that they'd allow a position of this size by a junior trader, unless the systems were feeding them bogus numbers.

It is possible that he "upgraded" the report spreadsheets that would have caught him, since at most firms they are not secured, and can be changed by anyone in the department. Often this just results in ghastly errors , but they can be used for darker deeds. Some banks use products like Xenomorph to seal and manage spreadsheets, but most just hope for the best.

His VBA skills would have helped him a lot to keep the illusion alive. Traders hit spreadsheet problems so hard that I've helped a couple of banks build teams of thick-skinned Excel jockeys who can hack them into shape in real time under pressure - but most banks do not have these, so you have untrained people helping each other. Knowing Excel, he would have been asked to sort out his colleagues' spreadsheets, and left sitting at their PCs able to execute any number of misdeeds while his colleague went off for lunch. That covers the claims that he intercepted emails and carried out all sorts of technomancy on the risk systems without using a network sniffer or hacking the Windows kernel.

Could it happen here ?

France and Britain represent the opposite poles of regulation. Under EU tutelage Paris passes market laws which are policed "politically", i.e. not on important French companies, while the British FSA applies gold-plated regulations with a staff so underpaid that they can't hire the right level of people. But the technology and business logic is identical in London, NY, and Paris - so of course it is in no way limited to the French way of banking. ®

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