I am still of the opinion that there is something fishy going on with the 'lone trader' theory at SocGen.

However, my mate Peter Guest at the FT has almost changed my mind with this take: (printed with his permission)

"Nope. Firstly, he's a junior trader, and not a well remunerated one. This is something that is more than possible - I've been saying for a while that there is too much access given to junior people in the middle- and back-office. I know people who, in their first 3 months, are dipping into the risk systems. If you've been in b-o, you know how to do user setups, so you can easily hack the systems to remove risk controls. I know people who routinely do it in the back office - they have no control over trading, so they can't create a trade, but they need to to shoehorn batches/index trades. Now, give someone with that knowledge access to the front end...

The scale interests me. I have to admit that, being an ardent conspiracy theorist, the thought did occur to me that this is a cunning way to disguise subprime losses as something less fundamental. But I don't buy it.

1. The reputational loss from this is much more significant than subprime. Everyone else has fucked up, and given that SG just launched its new agency brokerage, that reputation is key right now.

2. There was an undisclosed liquidity event in the markets Monday-Wednesday, which has been ascribed to fundamental issues, but is also consistent with a significant unwinding of a broad band of positions - like a number of index futures. The fraud was discovered on the 19th, and it's about right that they'd take that long to exit the positions.

It's fishy, but I think a conspiracy looks unlikely at this point. If and when he resurfaces... we'll see."