6 February 2008

Société Générale faces government IT security probe

Karl Flinders, Computer Weekly

French finance minister Christine Lagarde has recommended that further investigation into IT security at investment bank Société Générale (SocGen) should be carried out in her report to parliament.

Lagarde put together the report into the activity of rogue trader Jerome Kerviel, which led to losses of £3.6bn.

With a more in-depth banking commission investigation to be carried out, she has recommended that information system security and access code protection are focused on.

Bob McDowall, analyst at TowerGroup, said the process of analysing systems will shed light on a lot of Kerviel's activities. "It will evidence what has been the subject of conjecture and speculation."

He said it will reveal how the systems are not intrinsically at fault but how they are used.

"It may make banks look at biometrics," McDowall said.

The report also outlined the problems that can be caused if the back-office and the traders are in close contact.

Kerviel, who is said to be computer literate, spent time working in the back-office before becoming a trader, which gave him an understanding of computer systems and controls.

This article first appeared on the web-site of Computer Weekly, at http://www.computerweekly.com/Articles/2008/02/06/229287/french-minister-recommends-further-it-security-investigations-into.htm. © Reed Business Information 2008.

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