Ex-SocGen Trader Kataria Says He Was ‘Fired’ for Undetected Bets

Ambereen Choudhury, Donal Griffin and Alexandre Rajbhandari, Bloomberg News

A logo on the exterior of the Societe Generale SA bank headquarters in the La Defense business district of Paris, France, on Monday, May 8, 2023. SocGen reports earnings on May 12. Photographer: Benjamin Girette/Bloomberg , Bloomberg

(Bloomberg) -- A former Hong Kong-based Societe Generale SA trader claimed he was fired and said the French lender should share the blame for failing to detect his wagers.

Kavish Kataria, who left last year after SocGen discovered a batch of risky bets that officials had previously failed to pick up, said the profits and losses on his trades were reported on a daily basis to his higher-ups in Hong Kong as well as in Paris, while a daily email about the trades was also sent to the entire group.

“Instead of taking the responsibility of the lapse in their risk system and not identifying the trades at the right time they fired me and terminated my contract,” Kataria, a trader on the bank’s Delta One desk, said in a LinkedIn post Thursday.

A spokesperson for SocGen declined to comment.

The comments mark the first time the trader has spoken out about the events. Kataria left along with team head Ken Ng after an internal review of the transactions, Bloomberg News reported earlier this week.

While SocGen didn’t lose any money from the transactions, the trades could have cost the Paris-based lender hundreds of millions of dollars had an intense market downturn occurred.

Read More: SocGen Traders in Asia Exit After Options Bets Go Undetected

Kataria had bet on volatility staying low across Indian stock-market indices, people familiar with the matter have previously said, embarking on a strategy that involved dealing in options. SocGen’s risk managers failed to pick up on the trades because of a glitch related to their timing, the people said.

The former SocGen trader wrote that the “trades were auto booked” daily into the system. A daily missive was sent to the entire group mentioning the trades have been reconciled, he added.

“Our strict control framework has allowed us to identify a one-off trading incident in 2023, which didn’t generate any impact and led to appropriate mending measures,” a SocGen spokesperson in Paris said in a statement earlier this week.

Trading Limits

Kataria wrote that he traded options on Indian indices. According to his account, it was in his mandate and well within the trading limits. He joined SocGen in Hong Kong in 2021 and had helped the desk to make tens of millions of dollars last year, people familiar with the matter have said.

Financial services firms globally spend billions of dollars every year on their risk and control systems to try to curb losses. SocGen remains haunted by memories of Jerome Kerviel, a rogue trader on a Delta One team in Paris who cost the bank €4.9 billion ($5.2 billion) in 2008.

“It is very easy for an organization to put the entire blame on traders and make them the scapegoat in the entire incident,” Kataria said.

(Adds no comment from SocGen spokesperson.)