CASE STUDY (Chapter 3)

QUESTIONS TO CONSIDER

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?

 - If you hire a bunch of youngster and pay them big money to take risks, some will inevitably cut corners.Many are responsible for analyzing potential investment opportunities and assisting senior traders in executing trades.I prefer that junior traders should stay to what position are they in, so that they will inhance or professionalize the work had task them to do and when  time comes that their performaces are good, its probably the time to put them to the higher task or any aggressive positions. Mr. Gumble might be right about his statement.

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?

-The failure of SocGen is that they are not very aware of the internal control system thingy to detect Kerviel's suspicious transactions. They put their full trust to Kerviel.And they are acting very relax for all the warnings,emails that they receive.

QUESTIONS TO CONSIDER

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

- Yes, because he is doing this for the right of his own country..as he said,"I feel I had to do what's right for the country and the national infrastructure". He has more credibility and very sure about he discovered that was about to reveal by him.

  

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

- No,because of the very suspicious actions of Cisco.They are trying to keep a researcher to be quit.Theres something that they don't others to know.Lynn's discovery is very tough evidence.

 

3. Outline a more reasonable approach toward communicating the flaw in the Cisco routers 

- A system with dual route processors was Cisco's innovation. Cisco allows a router that has experienced a hardware or software failure of an active route processor to maintain data link layer connections and to continue forwarding packets during the switchover to the standby route processor. We have what we call thw "Black hats" the hackers or crackers who break into system with malicious intent and the "White hats"  hackers who reveal vulnerabilities to protect systems. Lynn discover that it is possible to create a network worm that propagate and took control of router..and this discovery is momentous.