Former Societe Generale trader Kavish Kataria has criticized the French bank for firing him over unauthorized risky trades, calling himself a “scapegoat” for the situation. Kataria claimed that his superiors in Hong Kong and Paris were aware of the profits and losses from his trades on a daily basis, and that a daily email was sent out detailing the transactions. Despite this, he was terminated from his position due to a lapse in the bank’s risk system and a failure to identify the trades in a timely manner.
SocGen confirmed Kataria and his team head Kevin Ng were dismissed after an internal review of their transactions, although the bank stated that they did not suffer any financial losses as a result of the trades. However, if there had been a market downturn, losses could have reached hundreds of millions of dollars. Kataria had been trading in options on Indian indices, which he was not authorized to do, leading to his eventual firing. The trades were not immediately detected as most were intraday trades.
Kataria defended his actions, stating that the trades were auto-booked and that a daily email was sent out to the entire group confirming the trades had been reconciled. He expressed frustration with the lack of accountability within the industry, calling for better regulations to protect traders who may find themselves in similar situations. Despite being let go from the bank, Kataria claimed to have made $50 million for the desk in the eight months leading up to his dismissal, highlighting his successful track record within the industry.
Risk management is a key area of concern for banks, with SocGen particularly sensitive to the issue following significant losses in 2008 due to the actions of “rogue trader” Jerome Kerviel. The bank reported a 22% drop in first-quarter net income, with profits on equity derivative sales helping to offset weaknesses in other areas of the business. With a renewed focus on risk management and financial oversight, it remains to be seen how SocGen will address the concerns raised by Kataria and others within the industry.
Kataria’s LinkedIn post emphasizes the challenges faced by traders in a competitive and high-stakes industry, where the consequences of a single misstep can be financially devastating. His criticism of Societe Generale for failing to share responsibility for the unauthorized trades reflects a broader concern within the industry about accountability and oversight. As financial institutions navigate complex markets and regulatory environments, the need for robust risk management practices and a culture of transparency and accountability becomes ever more apparent.
While SocGen has defended its actions and highlighted its commitment to a strict control framework, the incident involving Kataria raises questions about the effectiveness of these measures in practice. With the potential for significant financial losses in the event of a market downturn, the need for accurate and timely risk identification and mitigation is paramount. Kataria’s call for better regulation and adherence to industry standards underscores the importance of maintaining the integrity and stability of financial markets in the face of ever-evolving challenges and risks.
