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New York (HedgeCo.Net) – French officials have arrested a trader who allegedly lost more than $1 billion in complex derivative trades. Boris Picano-Nacci of mutual bank Caisse d’Epargne was taken in for questioning last week, days after the loss forced the bank’s top three executives to part ways.
Prosecutors in Paris are currently investigating whether or not they can nail the 33-year-old trader for a possible breach of trust.
A copy of the bank’s internal investigation was said to have been obtained by French news magazine Nouvel Observateur, when they published the findings on Wednesday. According to that report, Caisse d’Epargne found lax internal controls and several alerts that had been disregarded.
The bank has stated that this was an error made by a small team of traders, who made a bad bet on the direction of the stock market while exceeding their trading risk limit.
French Finance Minister Christine Lagarde revealed that an initial investigation had uncovered “serious holes” in the bank’s controls.
This is the second trading scandal to rock a French bank this year. Societe Generale made headlines in January for its $7 billion loss thanks to 31-year-old rogue trader Jerome Kerviel.
Caisse d’Epargne is currently planning a merger with French mutual lender Banque Populaire.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Bloomberg – Rogers Investment Advisors Y.K., a Tokyo-based hedge fund adviser, has hired Yoshiaki Iizuka and Eric Chong as it expects to more than double assets by the year-end.
Iizuka, 52, joined Rogers Investment on Aug. 1 as a managing director and head of Japanese research in Tokyo, after his most recent stint as chief investment officer of Tokyo-based Traders Investment Management Co., now JPS Asset Management Co., Ed Rogers, chief executive officer of Rogers Investment, said in an interview in Tokyo. Iizuka was chief executive officer of American Express Financial Advisors Japan Inc., Rogers said.
Chong, 36, joined Wolver Hill Advisors in New York, the U.S. counterpart of Rogers Investment, in mid-July, as a risk manager, Rogers said. He was most recently a risk manager at Societe Generale Asset Management Inc. in New York, where he was responsible for risk evaluation and analysis for a $5 billion fund of hedge funds, according to Rogers. Prior to that, Chong was a vice president at Stamford, Connecticut-based K2 Advisors LLC, a $6 billion multi-strategy fund of hedge funds.
Legal Week – French banking giant Societe Generale (SocGen) is reviewing its global panel of legal advisers, with a raft of City and international firms applying to be considered.
Firms will be appointed to the panel for a three-year period starting on 1 January, 2009, with the initial deadline for applications closing at the end of last month.
SocGen general counsel Frederic de Brouwer and deputy head of legal for Europe, competition law and group legal David Bourdon are understood to be co-ordinating the review.
The latest review will be SocGen’s third, as it only drew up its first formal panel in 2003 before remodelling it during the last review process.
The bank last updated its advisers in 2006 when it added Linklaters and Orrick Herrington & Sutcliffe to its nine-firm global roster. The pair joined Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer, Gide Loyrette Nouel, Norton Rose, Shearman & Sterling and White & Case on the list of preferred advisers.
West Palm Beach (HedgeCo.net)- Recent news from Reuters shows that there is a booming interest in foreign exchange markets. According to the article, FX traders are seeing an increasing demand from institutional players, pension funds, and corporations. However, searching the internet will reveal few true FX hedge funds.
Tri Global FX, a New York based FX management company, has been managing FX accounts on behalf of customers for several years. The firm’s head trader, Gregory Cotter, was a Chief trader at Societe Generale from 1998 – 2004, and has held similar positions at institutions such as Swiss Volksbank, Banque Indo-Suez, Credit Suisse, First Chicago, and European American Bank.
Recently, Futures Magazine has ranked Mr. Cotter a top trader in 2007. Their managed accounts program, Metro Forex, has been top ranked by Currency Trader magazine and by the Barclay Institutional Report.
Tri Global FX is pleased to announce the launching of a new FOREX hedge fund, Cable Forex Funds. More details about the fund can be obtained by registering at their website, http://cableforexfunds.com/.
There are few true FOREX hedge funds, Cable Forex Funds aims to be a leading fund in the FX market. With an uncertain economy, volatile markets, and a declining dollar, any portfolio should include FX. Even if the US Dollar recovers, it can still have a negative impact on a portfolio as traders have been investing overseas during recent EURO boom. FX is an asset class by itself, in addition to providing additional alpha to any portfolio.
Bloomberg – Merrill Lynch & Co., the third- largest U.S. securities firm, is probing one of its trading desks in London and has suspended a trader after discovering he may have overstated the value of some of the bank’s equity derivatives.
“The firm routinely reviews the marks our traders set,” Merrill spokesman Jezz Farr said May 23 in an e-mailed statement. “Our preliminary review determined that one desk used marks that appear to be outside of our accepted policy. We have suspended a trader and we continue to review this matter.”
The trader, whom Merrill declined to identify, was a member of a team that traded derivatives based on individual stocks for the firm’s own account, according to a person with direct knowledge of the matter. Merrill, based in New York, has determined that he may have overstated the value of some holdings by less than 10 million pounds ($19.8 million) during April, when his marks were detected, the person said.
Declines on European and U.S. markets this year have exposed a growing list of errant traders, tarnishing firms including Credit Suisse Group and Societe Generale SA. The discovery of potential trading lapses at Merrill may spur regulatory scrutiny as Chief Executive Officer John Thain works to reassure shareholders that the firm has improved risk management after his predecessor’s bad bets on mortgages contributed to a record loss of $7.8 billion in 2007.
“This case shows our oversight system works,” Farr said in the statement, referring to the firm’s detection of the suspended trader’s conduct. Merrill dropped $1.35, or 3 percent, to $43.15 at 2:30 p.m. in New York Stock Exchange composite trading on May 23.
