Chapter 3

Vignette

Trading Scandal At Societe Generale

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 won’t is by giving every youngster it hires a chance to show his mettle. That means allowing 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 this statement by Mr. Gumble?

Ans:

Peter Gumble on his views is right. Thought Kerviel was an example of a trader breaking the rules, he can’t do that alone, so it means there can be also someone who’s also doing that thing. Because those kind of incidents are often known at this time around. And it was so sad that those suspects can just spend for a meantime in a jail and can currently free on bound.

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

Ans:

SocGen’s were just too tight in terms of managing there company to their employees. And they give much trust to their employees. And they didn’t even bother to investigate their employees doings outside or inside in the company. While the Eurex Surveillance officer had gone much investigation when they have a motive that something is wrong of their one employee.

Case Study

3.)Whistle-Blower Divides IT Security Community

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

Ans:

Yes, Because Mike Lynn were just true to his self and just prevail what is really right to his discovery, And do what is he felt right to the country and the national infrastructure.

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?

Ans:

No, because the two was just want Lynn to speak on different topic instead of what the presentation was originally planned. And didn’t even think of Lynn’s own pride.

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

Ans: