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SocGen Knew of Kerviel Deals: Report

By Reuters -  |  Posted 2008-04-22 Print this article Print

Did Societe Generale know about Jerome Kerviel's activities as they were happening or soon after? 

PARIS (Reuters) - An official from a German market watchdog has said French bank Societe Generale (SOGN.PA: Quote, Profile, Research) "could not possibly have been unaware" of rogue deals carried out by junior trader Jerome Kerviel, a French newspaper said.

Le Canard Enchaine cited German market watchdog official Michael Zollweg as saying SocGen must have been aware of Kerviel's deals when Zollweg alerted authorities to unusual volumes on Germany's Eurex derivatives exchange.

The paper said Zollweg works for Germany's Trading Surveillance Office (TSO), which regulates Eurex. The paper added that Zollweg had given his version of events to French authorities investigating the Kerviel debacle.

The Paris public prosecutor has already said Eurex questioned SocGen about Kerviel's trading activities in November 2007.

Asked to respond to the Canard Enchaine article, SocGen said Eurex's questions did not concern Kerviel's margin calls or his overall trading position.

"SocGen had told Eurex that it could give it any further information that it so required, but Eurex did not reply to this offer."

Officials at the German Trading Surveillance Office could not be immediately reached for comment.

SocGen on January 24 unveiled 4.9 billion euros ($7.8 billion) of losses which it said were caused by unauthorized deals conducted by Kerviel. The ex-trader has been placed under formal investigation for breach of trust, computer abuse and falsification.

Societe Generale has consistently said Kerviel acted alone and that it only became aware of the extent of his unauthorized deals in late January, by which time he had built up a position worth nearly 50 billion euros.

In January, the Hesse Economics Ministry which supervises Eurex said that although Eurex tipped off SocGen in November about Kerviel, it did not inform German regulators about its concerns, as a major incident would have required.

(Reporting by Thierry Leveque and Sudip Kar-Gupta; Editing by David Holmes)

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