Very interesting article in the Wall Street Journal today (read it here) about the largest single trading loss in banking history.

I don't know if you follow international banking and trading, but the Jerome Kerviel trading scandal at French bank, Societe Generale, is fascinating. Kerviel was a low level trader at the esteemed French bank, but apparently wanted to be more. His job was to set up offsetting trades with fairly low risk and generate small sums for the bank. The bank's big guns, though, derived extraordinarily complex derivative schemes. These guys often were Ph.D's in mathematics and astrophysics, the stars of the trading side of the bank. According to the WSJ, Kerveil "yearned to prove that he could match and even exceed better educated and more highly valued colleagues.  At one point last year, said a lawyer involved in the case, Mr. Kerviel asked for a bonus of between €600,000 and €1 million -- far beyond what a trader at his level would normally receive."

Not only was he a frustrated lower level employee, he disdained his managers. And, apparently, the feeling was mutual. "Each tended to disdain the other. Mr. Kerviel admits to openly flouting the rules imposed by his superiors. Bank executives, meanwhile, say they missed a series of warnings, both internal and from outside, about the risks Mr. Kerviel was taking."

The end result is the Kreveil tried to guess the market's direction in a big way and, by the weekend of January 19th, had placed a "bet" on the market with his trades woth more than the bank was worth (50 billion Euros). The bank was able to unwind some of the trades once they discovered this mess, resulting in "only" a $7.2 billion loss.

Reading this, it seems apparent that this guy and his managers had no connection. They didn't understand him and he thought he was more important than his managers and the bank itself. How often do we see this in everyday life? Watch the movie "Office Space" and tell me it doesn't ring true to many jobs we've had.

I've just finished a book by Patrick Lencione called "The Three Signs of a Miserable Job" and that book addresses this very issue. I'll talk about that in the next few days.