The plunge that whacked markets in Europe and Asia as Societe Generale unwound the massive position built up by alleged "rogue" trader Jerome Kerviel has been officially ascribed to coincidence by the French government -- which says that only 8% of the drop can be attributed to SocGen's selling of a position larger than the GDP of Morocco.
But London traders have a different take.
The City is abuzz with talk of what happened in SocGen's Paris offices over the weekend of January 19 and 20 -- just after the bank had discovered Kerviel's massive position.
"Basically, they called all of their traders into the office to let them know what had happened," says one London trader. "By Monday, all of Paris knew that SocGen had a massive overhang and was going to be selling -- although I don't think anyone knew how big it really was."
It's tradition in markets to squeeze the weak longs and weak shorts, but there is also precedent for competitors declining the temptation if it presents systemic risk. That was the case with Barings, when competing banks agreed to let the British bank unwind its position alone and hold their own positions -- although many also said they would be forced to bail if the market moved too far against them.
With SocGen, it is still not clear what other banks were made aware of the situation, but it is clear that enough well-heeled individuals knew something was up, and a growing consensus in London is that their Paris counterparts simply helped themselves to the carnage on offer.
Not necessarily anything wrong with that, of course. It's what traders do.
But it means that SocGen's contribution to the turmoil of those three days far exceeds the 8% officially ascribed to it.