Sometimes, hilarity just writes itself. I guess the French just has more balls when it comes to persecuting people who lose, say, I dunno, multiple billions? whereas someone can collect back pay for losing $9 billion. hoo boy. I'm assuming the reason why people aren't more pissed is because they just don't know.
This isn't how things work though. It's not about the loss. A person can easily lose X amount of money despite making a good decision. The point is that he has to comply with two things: - Firm's risk profile/policy. - Relevant laws/regulations that the regulator has put in place. So for example, if this guy was operating a discretionary trading book/portfolio, and he was told you can take X amount of risk with a cap of Y million dollars, then that's all he really has to do. The X is usually determined by the regulator, and the Y is occasionally determined by the regulator depending on the jurisdiction. If he lost that money within the set limits, he's legally fine, though the shareholders may want to hold him accountable as per the terms of his contract. If not, then he should be prosecuted accordingly. But on top of that, it's important to understand that the regulator is a completely independent authority. For the most part, their competence/incompetence is not related to the rest of the government. Sure, they may be held accountable for things AFTER the fact, but they are never told how to set the rules, (again) as long as it's within the remit set by the law (and usually based on guidance from Basel, IOSCO, IAIS and relevant accounting standards). I haven't read much about the Morgan Stanley guy, but the Soc Gen dude clearly went over the line and deserves what he got. I just wanted to try to make the point that things are never so simple. There is just so much involved, and the amount of money lost is probably the least representative stat when it comes to these things. Quite frankly, you can probably blame much of the regulatory problems on the fragmented system in place in the US. It really needs to be tightened up and aligned a lot more, the amount of regulatory arbitrage going on just within the country makes it difficult for the regulators to have a clear picture of everything. Alas, your government seems more interested in monitoring my financial transactions as a citizen of/in Dubai than it is in monitoring Wall Street. If you were to compare the level of intrusion and sophistication that the US employs overseas with almost any transaction, you would be shocked that Wall Street is rife with compliance issues. But I guess it's just another case of obsession abroad and neglect at home - something I sincerely feel is unfortunate for you guys.
I was going to respond to say this same thing. That this guy was able to lose so much money without violating any US laws or the policies of his employer is an indictment of the system, not the person. Of course, I suppose that's just the point -- we need (either governmentally and/or corporately) a system in Wall St where it isn't possible for one person to lose so much money without breaking any rules, and we don't have it right now.
