HORIZON from SKADI - April 2024 edition
Skadi Limited
Setting the bar in complex wholesale financial investigation, process reviews, expert witness and industry training.
? Authors Nicolas Corry and Damian Taylor
In this month’s HORIZON:
Rogue (Delta) One
16 years on from the Jerome Kerviel Rogue Trading event, which nearly destroyed Societe Generale, and forced the resignation of the bank’s former Chief, it seems that unauthorised trading activity has occurred again on the bank’s Delta One desk. This time in Asia.
The unauthorised activity alleged to have happened is specific to products relating to India and the Indian Stock Market. ?From what we can read, a member of staff on the Asia Delta One desk booked trades in index options which were not captured by the firm’s risk systems. Timing appears to be an issue. This may relate to cut-offs between trades being booked in the system and when risk reports are run. It is possible that this was further exacerbated by the different time zones between where trades were transacted (India), where traders were located (Hong Kong) where the Bank is head quartered (Europe).
Revenue before controls
?April saw our MD Nicolas Corry quoted in a BBC article regarding fake articles on Facebook, and the seemingly “meh…” response from Meta when these are reported. At the heart of the excellent investigation by Jane Wakefield is a type of online fraud called “cloaking” whereby a legitimate link that is attached to the original advert is set to redirect to a malicious website once Facebook’s algorithms have “okayed” the advert.
This story was released on the day that Meta revealed its earnings, and the investor call was, unsurprisingly, full of details on how Meta plans to integrate AI tech into its recommendation engine. As in the case of a lot of the discussion around AI, there seems to be a lot of emphasis on how it will improve revenues, profitability ( and hence share price), and far less on the controls that sit around this and, indeed, how AI could be used to help enhance controls.
"Hear Damian and Nic discuss these topics on this month’s edition of Horizon Unpacked"
Previous Horizon editions can be found here
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