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Drs. Canac, Dykman Recognized for Financial Fraud Research
4/14/2010
 Two University of St. Thomas Cameron School of Business professors have earned accolades for their research on financial fraud. Dr. Pierre Canac, associate professor of economics and finance, and Dr. Charlene Dykman, professor of marketing and management, were recently awarded the Distinguished Research Award at the 2010 International Conference of Allied Academies in New Orleans.
Canac and Dykman were recognized for their business case study, “The Tale of Two Banks: Société Générale and Barings,” which documents the true story of two rogue traders, Jerome Kerviel of Société Générale and Nick Leeson of Barings.
“Fraud in the financial world is a serious problem that our society has not been able to eliminate or even reduce much,” Canac said. “New financial scandals have emerged, Bernard Madoff and Allen Stanford in 2009 for example, and more will probably be discovered. This is a global problem that must be denounced, exposed and resolved in the not-too-distant future.”
This research can be used to assist professors teaching finance, international management, auditing, risk management and related courses worldwide. Drs. Canac and Dykman’s case study will be published in the Journal of the International Academy for Case Studies.
 “This Distinguished Research Award from the Allied Academies is significant recognition of our research efforts.” Dykman said. “Case studies help us bring the real world into our classes and teach our students about the challenges they may face in their careers.
Canac and Dykman’s research documents the stories of two “rogue traders,’ Nick Leeson of Barings Bank PLC in 1995 and Jerome Kerviel of Société Générale in 2008. Leeson was the chief trader at the Singapore branch of Barings Bank PLC, while Kerviel was a low-level trader working in the Paris headquarters of Société Générale. These financial frauds led to bankruptcy for Barings and more than $7 billion in losses at Société Générale. Neither of these “rogue traders” fit the typical psychological profile of successful traders who are usually educated at top-tier universities, are gregarious, possess a sense of invincibility, work extraordinarily longs hours, are always connected to the market, sleep very little and react with joy or sadness based on the state of the market on a given day. Leeson and Kerviel were both from humble origins and earned degrees at second-tier universities and seemed far removed from the typical high-flying trading elite.
The case explores the career path followed by each trader, the insider knowledge gained along the way, and the lack of oversight that provided opportunities for their fraudulent activities. These frauds are separated by more than thirteen years and many miles geographically, with the Barings fraud taking place in Asia in 1994-1995 and Société Générale in Europe in 2008. It seems that Société Générale failed to learn from the experiences at Barings which occurred many years prior. The case examines dissimilar impacts each of the rogue trader’s actions had on their respective banks. The case also raises questions regarding what went wrong, the lack of operational and managerial controls and how similar frauds can be prevented in the future.
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