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Monday, 5 November 2012

The World’s Most Indebted Man Is $6.3 Billion In The Hole


Jerome Kerviel, former financial arbitrage trader, is currently the most indebted person in the world. He owes his former employer, French bank Societe Generale, $6.3 billion for fraudulent trades made in 2007 and 2008.
Mathew O’Brien write that Kerviel managed to trade $73 billion in unauthorized trades during his tenure at Societe Generale using sophisticated computer hacking.

O’Brian writes:

“In plain English, arbitrage just means taking advantage of discrepancies when things should have the same price, but don’t. The idea is to buy the cheaper one, sell the more expensive one, and then wait for them to converge… The beauty is it doesn’t matter whether markets go up or down–you’re both long and short–just that the prices actually converge.”

Of course, Kerviel won’t be able to pay anything back until he finishes his prison sentence in 2015 and even then it will be impossible for him to pay up in full. Some sort of payment plan will need to be decided upon and even then Kerviel will be paying up for the rest of his life.

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