Why A Great Wall Street Underdog Story Might Be Over


Young finance majors and MBA candidates dream of landing a high-paying trading gig with a bulge bracket Wall Street investment bank. However, positions are extremely limited and are often reserved for those with top grades at top-rated universities.

But hope wasn’t lost on the hardest working, most optimistic candidates.

Many repeat to themselves the story of Sidney Weinberg, the legendary Goldman Sachs CEO who got his start as assistant to the janitor. To a lesser extent, they think about James Cayne, the college dropout who eventually became CEO of Bear Stearns.

Regardless of the story, the lesson is clear: with hard work, anyone can make it to the top.  With this in mind, patient Wall Street job seekers accept roles at the lowest rungs of the back office, offering support to the front office.  From there, they work their butts off in hopes of moving up the food chain.

But that dream may be fading away thanks to the infamous underdog stories of Jerome Kerviel and now Kweku Adoboli.

Jerome Kerviel earned his bachelor’s and master’s degrees at low-profile universities.  He landed a job back office job at Societe Generale.  Two years later he was promoted to trading assistant.  Another two years later, he was promoted to trader and market-maker.

However, years later we learned that Kerviel leveraged his knowledge of back-office systems to mask trades that eventually led to a loss to the tune of over $6 billion.

Kerviel’s story had many buzzing about the potential risks of promoting a back-office trading support to front-office trading desks.  But this message wasn’t taken very seriously at UBS.

Kweku Adoboli’s story reads shockingly similar to that of Kerviel.  At UBS, Adoboli started in the back office before making his moves to the the trading desk.  And like Kerviel, Adoboli seems to have used his knowledge of back-office functions to mask trades.

This is not to say that all back-office employees have intentions to defraud their employers.  However, employers need to do whatever it takes to reduce this risk.  Many include criminal background checks.  Some employers even require credit checks, as poor credit is sometimes associated with those likely to commit white collar crime.

Hiring managers are probably thinking about Kerviel and Adoboli each time a back-office employee submits a job application to be a trader.  It’s imaginable that these applicants will come under much more intense and perhaps unfair scrutiny.