If confirmed, this represents the greatest fraud scandal by a single individual of all time. The key issues were too much trust and the lack of checks and balances. While most folks are ethical and trustworthy, companies always need compensating controls that "trust but verify" that all is going well.
 
 Most likely large financial institutions will be looking at their controls even more closely after this scandal. This includes improving classical audit controls like: separations of duties, checks-and-balances, and autonomy levels. These controls are also beneficial to detect and prevent accidental errors as well.
 
 French bank blames trader for $7 billion fraud
 Societe Generale to seek new capital; swindle is one of history’s biggest
 http://www.msnbc.msn.com/id/22818054/
 
 
 QUOTE: PARIS - French bank Societe Generale said Thursday it has uncovered a $7.14 billion fraud — one of history’s biggest — by a single futures trader who orchestrated a series of bogus transactions. The fraud destabilized a major bank already exposed to the subprime crisis. France’s second largest bank by market value said it must seek 5.5 billion euros ($8.02 billion) in new capital, and the chief executive offered to resign.
 
 The trader at SocGen was responsible for basic futures hedging on European equity market indices, the company said, making bets on how the markets would perform at a future date. Futures trading began with selling commodities like sugar or oil to be delivered at a specified date. The practice has expanded enormously in recent years to include extremely complex financial instruments, but the company statement said the trader was involved in the more basic forms of hedging.
 
 If confirmed, the fraud would far outstrip the Nick Leeson trading scandal in 1995 that bankrupted British bank Barings. Barings collapsed after Leeson, the bank’s Singapore general manager of futures trading, lost 860 million pounds — then worth $1.38 billion — on Asian futures markets, wiping out the bank’s cash reserves. The company had been in business for more than 230 years.