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French bank Societe Generale said fraud by a single trader had caused it a 4.9 billion euro ($7.1 billion) loss and that it would seek emergency funds as a result, shocking battered markets on Thursday.
If fraud is proved, the loss would be the biggest caused by a rogue trader, ahead of the $2.6 billion hit to Sumitomo Corp in 1996.
Here is a list of some of the major financial markets trading frauds in recent years:
April 1992 - Indian banks and brokers were accused of colluding illegally to siphon $1.3 billion from the inter-bank securities market to fuel a boom on the Bombay Stock Exchange. Top broker Harshad Mehta, the main person accused in the scandal, died in jail during the trial.
February 1995 - One of Britain's oldest investment banks, Barings Plc, collapsed after a futures trader in Singapore, Nick Leeson, lost some $1.4 billion in derivatives trading. Leeson was jailed in Singapore. Barings was subsequently sold to Dutch bank ING (ING.AS) for one pound.
September 1995 - Japan's Daiwa Bank suffered a $1.1 billion loss from unauthorized bond trading by Toshihide Iguchi, one of its executives in the United States. He was imprisoned in 1996.
June 1996 - Japanese trading house Sumitomo Corp suffered a $2.6 billion loss over 10 years from unauthorized copper trades, primarily by chief copper trader Yasuo Hamanaka. Sumitomo fired Hamanaka, once dubbed "Mr Five Per cent" because his trading team was believed to control five per cent of the world's copper trading. He was later jailed for eight years.
March 1998 - Joseph Jett, a former Kidder Peabody top bond trader, was accused of creating false profits of $350 million to hide losses and failing to keep proper records, in a scandal that eventually led to the sale of the firm. He was ordered by a judge in September 2007 to repay $8.21 million in losses and was fined $200,000.
January 2001 - Former chief financial officer of the now-defunct Griffin Trading Co., Scott Szach, was charged with diverting more than $5.56 million from a company bank account to a brokerage trading account to fund unauthorized trading in the 18 months before the firm's demise.
September 2001 - Merrill Lynch fired two senior executives for their failure to supervise a currency dealer who diverted profits on foreign exchange deals to favored clients, leaving the bank facing a $10 million bill.
February 2002 - Ireland's largest bank, Allied Irish, revealed a rogue US trader, John Rusnak, had defrauded its US subsidiary of up to $750 million. Rusnak was sentenced in January 2003 to 7-1/2 years in prison. He admitted devising a scheme that netted him $850,000 in salary and bonuses from 1997 to 2001.
March/April 2006 - Hedge fund Amaranth Advisors LLC racked up $6.4 billion in losses from natural gas contracts on the Nymex before folding in 2006. In July 2007, the Commodity Futures Trading Commission charged Amaranth and its former head trader, Brian Hunter, with trying to manipulate natural gas futures prices.
- REUTERS
