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Rogue trader in police custody
26/01/2008 19:15 - (SA)
Paris - French police on Saturday questioned a junior trader blamed for a $7bn loss at Societe Generale after keeping his superiors in the dark for
months about thousands of illicit deals.
A judicial source said on Saturday Jerome Kerviel, 31, was
in custody at the headquarters of the finance police. Under
French law, suspects can be detained for 24 hours before any
charges are pressed.
Police on Friday visited the headquarters of Societe
Generale where Kerviel worked until last weekend, poring over
his computer records, and also searched the apartment where he
lived on the western outskirts of Paris.
Kerviel's family say he is being made a scapegoat for the
world's worst rogue trading scandal.
The crisis was revealed on Thursday when SocGen said one of
its more junior traders had found a way round internal checks to
make huge bets on the future direction of stock exchange prices
and then covered his tracks as losses piled up.
The bank itself discovered the illicit positions eight days
ago and unwound them at the start of this week as financial
markets plunged, compounding the losses.
Authorities are putting pressure on SocGen's managers to
explain how a bank which won accolades for innovation and
boasted state-of-the-art risk controls could have been tripped
up by a rogue trader acting alone.
The scandal at Socgen struck at the height of a global
credit crisis, set off by a meltdown in US sub-prime mortgages,
which has forced banks around the world to take tens of billions
of dollars in charges as the value of their exposures crumbled.
SocGen has lodged a complaint with police based on three
main charges - fraudulent falsification of bank records,
fraudulent use of such records and computer fraud. The three
charges carry maximum prison terms of between two and five years.
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