Chapter 3: Vignette and Case Study

Vignette: Trading Scandal at Societe Generale

1. Peter Gumble, European editor for Fortune magazine, comments, "Kerviel is a stunning example of a trader breaking the rules, but he's by no means alone. One of the dirty little secrets of trading floors around the world is that every so often, somebody is caught concealing a position and is quickly - and quietly - dismissed... [This] might be shocking for people unfamiliar with the macho, high-risk, high-reward culture of most trading floors, but consider this: the only way banks can tell who will turn into a good trader and who even the most junior traders to take aggressive positions. This leeway is supposed to be matched by careful controls, but clearly they aren't foolproof." What is your reaction to this statement by Mr. Gumble?

          My reaction was Mr. Gumble was right. Jerome Kerviel generally violates the code of ethics     at the SocGen, of one of the second largest banking establishment. And what’s worse is that Kerviel is an employee in the said establishment doing internal fraud. A trader breaking the rules, above anything else employees have expected to obey the rules of their respected company as well as protect the image of the company.

2.    What explanation can there be for the failure of SocGen's internal control system to detect Kerviel's transactions while Eurex detected many suspicious transactions?

          SocGen was so confident that they never thinking of failing. Since they are so capable of gaining good result and feedbacks and that they are so illustrious in its accomplishments,  that’s why they never even bother to think that they may failed one day. They must be vigilant all the time at the same time don’t take too much confidence as is everything flows forever. There is really such time that they may be defeated or failed on the time they least expected.

Case Study # 3: Whistle Blower Divides IT Security Community

1.       Do you think that Mike Lynn acted in a responsible manner?  Why or Why not?

     Yes, for me, Mike Lynn doing the right thing in what he thinks in a responsible manner. He discovered a threat regarding Cisco routers about security systems and found out that it was possible to create network worm that could propagate itself as it attacked and took control of routers across the Internet.  You presume that there was a flaw in the system, and as a responsible worker, what you intended to do? Just don’t mind and continue working with them even if threats may harm the majority? Or chooses to inform everybody that there was a threat for them to be aware and avoid at. I considered him as a responsible worker  because he’s not choosing to be mute and disregard things as is nothing was happened instead he chooses to speak out what he had discovered which may be possibly affect the community and damage of property. He’s not with the money because it was stated that he resigned in the morning before the presentation but continue to present what he had discovered. A responsible and a professional  IT work must stand in its own beliefs and opinions even if others contradicts with him and even if it’s the meaning of this is standing alone. “I feel I had to do what’s right for the country and the national infrastructure” said Lynn, and that was made him a responsible one. Indeed, it is always important to do the right thing that doing it right. But also Lynn has its flaw about his attitude towards the problem. Mike Lynn doing the right thing in what he thinks a responsible manner. He’s not completely gave the details which made him somehow irresponsible one. But the pin point here is that he’s doing the right thing, no matter what way it is.

2.    Do you think that Cisco and ISS were right to pull the plug off on Lynn’s presentation at the Black Hat Conference? Why or Why not?

         No, they don’t have the right to pull the plug on Lynn’s presentation because first and foremost it was a signed of disrespect towards other person especially when he or she was only doing his or her task.  It’s funny to think that being famous and brilliant group they are, there are the one doing unethical manner. And of course, if they are in right side, they are not afraid to reveal it in public. They are just obvious that there was really a threat in their side. And they just only tell the community that they are obviously guilty. Discovering that when you are in front talking is an insult and disrespect in the part of the listener is a damn hurt, what’s more when somebody pull the plug when you do the presentation. You’re trying to inform the public about the information you had but there are group of somebody disagreed. It feels like you, against the world fighting for what is right versus doing it right.

3.     Outline a more reasonable approach toward communicating the flaw in the Cisco routers that would have led to the problem being promptly addressed without stirring up animosity among the parties.

           For me, one reasonable approach toward communicating the flaw in any form of any problem or scandal is to have a better conversation. “Nadadaan naman ang lahat sa mabuting usapan” as it says. Addressing the problem properly and calmly avoid animosity among the parties. Each one of the party must and should admit their faults and don’t hesitate to say sorry. Each one must drop their pride for the sake of everybody and for the better productivity among of you. It is true, that the world is competing, in every aspect of life, in any circumstances, in any given opportunities but we shouldn’t forget the essence of being simple, simple in a way that we don’t tend to do wrong just to be rich, or to do what is right just to be famous, sometimes it’s to be just simply the way you are. Learn to accept that things aren’t happening in what you intend, say sorry if you think it’s your faults and be thankful for everything you have. A better conversation may solve even the worst problem if and only if both parties know when to fight when there is a need to fight or just simply surrender because at the first place, you’re a loser.