Bank Analysts: Don't Reveal Your Analysis of French Banks

November 20th, 2013
in Op Ed, syndication

Written by

We have have learned in the past 24 hours that what appears to be an analysis of the published financial statements of a French bank, SocGen (Société Générale), has been interpreted by French authorities as 'knowingly disseminating false information'. As a result fines have been levied by the French financial market supervisory authorities against a French analyst-blogger and an American blogger who reported the French work, pursuant to a complaint by the bank.


Follow up:

About 24 hours ago GEI News posted a story by Hilary Barnes about the actions in France which resulted in fines being assessed against Jean-Pierre Chevallier ( and Mike Shedlock (MISH'S Global Economic Trend Analysis). The fines levied by the Autorité des marchés financiers amount to €10,000 ($13,400) for Chevallier and €10,000 ($10,700) for Shedlock.

A few minutes ago Shedlock posted a summary of the facts involved in this case.

The initial analysis published by Chevalier on 14 August 2011 reported that, using the classification of assets attributed to U.S. Fed Chairman Alan Grenspan, the leverage revealed by published SocGen financial statements was 50:1.

Shedlock was not the only blogger to pick up the Chevalier analysis, which he did in a post 15 August 2011, but Zero Hedge also did the same day Chevallier posted. Zero Hedge was not mentioned in the complaint that resulted in the fines. I guess there are benefits to being anonymous.

On 16 August Forex Crunch provided a statement from SocGen which showed the bank's own calculations of leverage to be 28:1 or 23:1, depending on accounting convention applied.

This was all happening when SocGen stock was being crushed by rumors of impending bankruptcy.

The core of the disagreement about leverage appears to have centered on the bank carrying peripheral Eurozone country debt as risk-free. This was at a time when the downgrading of Greek debt was occurring and within weeks it was subjected to substantial 'haircuts' (devaluation).

In September 2011 The Wall Street Journal published a comprehensive article about the very high leverage of French banks, including SocGen. Shedlock provides a lengthy excerpt from that article.

I have to wonder about the idiocy involved here. Is the message that independent bank analysis is deemed illegal in France? If leverage analysis is reported is it only permissible to do so without risk of facing spurious charges if one remains anonymous?

Mike Shedlock summarizes his take and planned action:

The Witch hunt is now over and I was fined nearly as much as Chevallier. It's absurd enough to fine someone for a quote, and even more so when the facts are accurate.

The AFM has no jurisdiction over me, so they won't collect. As a US citizen living in the US, I am not subject to the absurdities of French laws, or French witch hunts. All they get from me is a vow to never go to France.

Best wishes to Chevallier in his fight against absurd fines and bureaucratic madness gone wild. Hopefully he can use the article from the WSJ in his defense.

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