Danger: Traders with middle-office experience

A valid observation. Once the details of this case are formally made public, it may be useful to compare the report with that of APRA 23 March 2004 'Report into Irregular Currency Options Trading at the National Australia Bank' http://www.nabgroup.com/0,,45453,00.html, especially page 23:  

Operations staff engaged in detailed discussions around the confirmation and

reconciliation processes, outside of normal activity. Although parties to the

discussions may have had innocent intent, this may have provided important

information on the back office systems and procedures to the traders who

subsequently undertook the fraudulent activity using this knowledge to avoid

detection.'

In the SocGen case, reports to date indicate that the individual had worked in the back office until 2004 and 'kept up to date'.  In my view, the concealing of errors and manipulation of systems, processes and people in trading rooms occurs frequently.  Most don't get identified because the ultimate financial consequences (profit or loss) are small or zero, and those which do get identified are not escalated within or outside of the entity unless circumstances force such disclosure.  I've always felt that a lie-detector should be compulsory and frequently used hardware in a trading room and its support environment.