Giving Rogues a Bad Name

The Times of London has an excellent article on “rogue trader” Jérôme Kerviel, who recently lost 5 billion euros for the French bank where he worked. Even when caught red-handed, he didn’t give up the charade. His escapades make my poker losses look small by comparison. Even if you add in my wife’s poker losses, we are only starting to get close to that number.

A rogue trader can do a lot more damage than a rogue sociologist.


Steven (Prof. Levitt?)-

I love your blog (and your publications). Today's post linking to Gang Leader for a Day has finally forced me to purchase the book you have so long been promoting. It had better be good ;).


I must say I didn't understand why Prof. Levitt thought so highly of Gang Leader for a Day, That is until I read it. A fantastic book, and well worth the read especially if you like the chapter in Freakonomics about Chicago gangs.

Mike B.

It is going to take a heck of a lot more than one trader to give Rogues a bad name. After all, they are the only class capable of finding/disarming traps, picking locks, and "backstabbing" for extra damage.


Why is the trader immediately called a "rogue" and not the bank? Isnt the bank a "rogue" bank if it did not have systems in palce to catch this or its managerial rank ignored signs....I see this as a way for the bank to disassociate itself from the trader and keep its reputation...The press should not go along and call him the "alleged rogue trader" how about saying the " alleged bad trader in the rogue bank"

Lyn LeJeune

Okay, I looked up the term "rogue" in my handy-dandy Webster's Encyclopedic Unabridged Dictionary
that I keep on the floor next to my chair. There's two definitions. Let's see where these two rogues fit?
1. "a dishonest, knavish person; scoundrel 2. a playfully mischievous person; scamp."
The author guy went around with some urban-type criminals doing research, and other dubious things to fit in,for a college paper that ended up in a book that resulted in some moola that got him a great gig at an Ivy League college. That would be a little bit of one, and two, um, not so much. The trader guy I suppose is number one, and now the news is that he was doing his trading for a year more than his employers have admitted. What a scamp! Okay, his is also more soundrel than rogue. I'm thinking that in our pop culture definition a rougue is someone who works outside of mainstream society in order to get what he/she wants. Sometimes we call that a hero, but some people also think Dexter the serial killer is pretty heroic in his own know, as long as you are authentic, then all is well in the land of rougedom. Be that as it may, the next we will hear is that Mr. Venkatesh's agent will have optioned his book for a movie and Mr. Kerviel's agent (and don't for a moment think he doesn't have a big-time agent by now) will have optioned his story for a book with a really good ghost writer, with a movie option thrown in because there's nothing better than a movie about a rogue. I'm thinking Brad Pitt or Chritian Bale. Now how's that for Freakonomics? Or is that freaky-nomics?

Lyn LeJeune- The Beatitudes Network-Rebuilding the Public Libraries of New Orleans, The Beatitudes- all royalties to the New Orleans Public Libraries, and new "All May Not Be Well; And All May Not Be Well; And All Manner of Things May Not Be Well," at



What do we call the converse? The peon who wagers a ton of money but hits the mother lode? That doesn't seem to be reported, and I assume it's happened once or twice.


And what did your dictionary have to say about "rogue" say when you looked it up as an adjective, rather than a noun?

Something like, perhaps, "no longer obedient, belonging, or accepted and hence not controllable or answerable; deviating, renegade"?

I would suggest that, in subverting the bank's systems to pursue his own schemes of wealth, this trader proved he was not controllable and, for a time, became unanswerable as well.


You disappoint me Levitt. This was not a charade, it is a well-designed strategy. If the bet on futures won, the shell company that was inserted in the deals would have been found to have ended with a good whack of the profits. Societe Generale would have been left with enough to make them think Jerome K was a genius. If the bet lost (as it did) Societe Generale was left with all the losses and Jerome K. had left no (at least he hopes it is no) trace of fraudulent intent. The nature of his bet was a billion euros if he won and a pink slip if he lost. Odds which could attract a lot of people - come to think of it maybe Jerome K was trying to copy people who got away with the trick when the market was rising.


After reading Freakonomics, M. Kerviel's story reminds me of the "rogue teachers" who encouraged their students to cheat.
Indeed, Kerviel claims that he's certainly not the only "rogue trader" and that Sté Générale top executives have been keeping their mouth shut (if not encouraging) regarding those transactions.

Question is, how is that situation different from the Chicago Public Schools? Is it possible to collect enough relevant data, analyse it and identify rogue traders? If external auditors cant do that, all the fuss about control and compliance mechanisms is pointless.

Wayne C.

I think the most interesting question is how many "rogue" traders there actually are. I don't think we ever hear of the traders that dupe the safeguards but make money.

Nicholas Weaver

ONe other thing thats interesting. He probably cost the bank about 1-2 billion euros. The rest of the loss was selling a 50 billion euro portfolio in a declining market in a 3 day period.

Joe Zuntz

Speaking of giving things a bad name, the newspaper is not called the London Times. The major newspapers in Britain are all national, and aren't given a city name. There are local newspapers, but they tend to focus on local issues.

Calling it the British Times (with only the "Times" in italics) would make sense, if you wanted to distinguish it from the gray lady. Or possibly The Times of London (again, with only "The Times" italicized).


I find this episode of trading gone wild hardly believable. Having worked in a trading environment, there are limits placed on every trader. Positions are monitored closely and marked-to-market daily or even on an hourly basis. Every trading unit is subject to audit and compliance procedures. If there are exceptions, they need to be approved by higher-ups. If there is a failure in the system, the ones who should share the blame are the top executives since they ignore or let the anomaly persist. Banks and trading companies ignore these basic principle. Even casinos put a limit on what you can bet since this is part of their risk management policy.