French bank Société Générale says that it has uncovered a "fraud" by a single trader which lost the bank $7.1 billion. According to MarketWatch, the fraudulent trades were made in 2007 and 2008. The trader, whose role at the bank was to make "plain vanilla" hedges on European stock-market indexes, used his knowledge of the bank's control procedures "to conceal these positions through a scheme of elaborate fictitious transactions."

Société Générale plans to raise €5.5 billion to help offset the loss.

The French bank did not disclose much about how the loss happened or what the trader's motivation might have been. Perhaps that does not matter. What does matter is the the actions get to the heart of risk management at big banks. At a number of U.S. financial companies, traders clearly took huge positions in subprime instruments. That has cost some of the largest banks in this country billions in write-offs. No one has offered an adequate explanation of who was minding the store when those risky decisions were made.

The Société Générale news is just more of the same. Managements at big banks have not learned the lesson.

Douglas A. McIntyre is an editor at 247wallst.com.