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It has been a time for scapegoats. First, it was the 31-year-old trader at Societe Generale who, given the bank’s position, seems to have single-handedly lost $7 billion without anyone at the bank noticing. At Bristol Myers Squibb, it was Edward Dwyer, Bristol’s longtime treasurer, who—-along with several mid-level managers–took the fall for the company’s $275 million loss on trading of mortgage-backed auction rate securities.

First, let me be clear: Both these men must assume substantial responsibility for the losses their companies have suffered. This is absolutely the case with Jerome Kerviel, who violated trading rules the bank had established. In both cases, however, there is a bigger question to be put to senior management: “Who knew and when did they know it?”–to misquote the late Sen. Howard Baker during the Watergate hearings.

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