Banking Law
Securities Suit Filed Against SocGen Cites ‘Culture of Risk’
Posted Mar 12, 2008, 01:04 pm CDT
By Martha Neil
A securities suit has been filed against Société Générale over the French bank's disclosures about its subprime mortgage holdings and the internal controls that failed to prevent a reported loss of more than $7 billion attributed to a single rogue trader.
Cohen Milstein Hausfeld & Toll says it has sued the bank and individual defendants in federal court in Manhattan, on behalf of a Missouri resident who bought SocGen American Depository Receipts, reports Reuters. The law firm apparently is seeking to pursue the case on a class-action basis, representing all U.S. purchasers of shares of the bank's stock between Aug. 1, 2005, and Jan. 23, 2008, as well as purchasers of the American depository receipts.
A copy of the complaint the law firm provided to Reuters contends, as the news agency puts it, that "SocGen had a 'culture of risk' in which risky trading was tacitly permitted," among other allegations.
As discussed in an earlier ABAJournal.com post, Jerome Kerviel, possibly with the help of another person, is accused of having caused the bank to lose some $7.2 billion due to his unauthorized trading in stock index futures. It is reportedly by far the largest such loss ever caused by one individual.
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