In recognition of the day, let us talk about a work of fiction. But not Joyce's immortal re-write of Homer. That would be rather outside our remit. Let us talk, rather, about Jerome Kerviel's imaginary friend.
You remember Kerviel, surely. Back in January 2008, when subprime contagion was already a worry but before all the craziness for which 2008 will be remembered, Kerviel lost 4.9 billion euros belonging to his employer, Société Générale, placing allegedly unauthorized bets on European stock index futures. His superiors there apparently discovered his losses -- overcoming his best efforts to hide them -- on Saturday, January 19. On the following three trading days (Mon. through Wednesday), the bank closed out Kerviel's positions.
Now Kerviel is on trial, breach of trust, computer abuse, and forgery, and his defense is that his trading was not unauthorized after all, that he was no Leeson-style "rogue." Here's a discussion of the issue phrased in the language of the quants.
But now we get to the almost Joycean twist. Kerviel now says he invented an imaginary friend called "Matt," supposedly a rugby loving hedge fund guy. Kerviel would answer questions from a broker, Moussa Bakir, about his trading strategy by saying that the questioned trades were in response to pressure from client "Matt."
Which Matt did he have in mind when he made up that name, one wonders? Damon? Lauer? "Mon ami, Matt, du Spectacle d'Aujourd'hui ...." Anyway, this admission would seem to sink the defense that "my bosses knew it all along."
The Reuters' take is here.
What is left of the defense, I imagine, is the idea that they should have known, and implicitly authorized Kerviel's shenanigans by looking the other way, perhaps pretending to believe transparent lies in the process. Doesn't sound like much of a defense, but it may well continue to delight and instruct, the two great goals of art.
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