Kerviel`s Losses Said to Be $3.2 billion in June 2007By Reuters - | Posted 2008-02-14 Print
Jerome Kerviel, the trader blamed by Societe
Generale for heavy losses, had a trading deficit of 2.2 billion euros
($3.2 billion) as early as June last year, an adviser to his lawyer
told Paris Match.
PARIS (Reuters) - Jerome Kerviel, the trader blamed by Societe Generale for heavy losses, had a trading deficit of 2.2 billion euros ($3.2 billion) as early as June last year, an adviser to his lawyer told Paris Match.
The French bank unveiled 4.9 billion euros of trading losses last month but has since said that Kerviel was 1.4 billion euros ahead at the end of December, a gain on which it has to pay tax.
However, a computer expert appointed by Kerviel's lawyer says he had been showing steep losses much earlier in 2007.
Asked in an interview with weekly Paris Match if Kerviel had told him about the end-year gain, Jean-Raymond Lemaire said, "Of course. He also told me about a 2.2 billion euro loss in June 2007. In his job, to win you have to be prepared to lose."
Kerviel, 31, is currently being detained as part of a formal investigation into unauthorized trades.
Societe Generale says he acted alone, but Kerviel has told police the French bank must have known about his activities.
Societe Generale and Lemaire both declined comment.
Kerviel's spokesman did not return calls seeking comment.
Lemaire maintained that Kerviel's trading position in stock market derivatives was not negative on Friday January 18. The bank discovered discrepancies that uncovered his activities later that evening.
It unwound 50 billion euros of futures bets taken out by Kerviel in steeply falling markets on January 21-23 before shocking the banking world by announcing the heavy losses on January 24.
"It is not Jerome Kerviel who lost 4.9 billion euros," Lemaire said.
Separately, French weekly Nouvel Observateur said Eurex, the derivatives exchange and clearing house, alerted SocGen twice late last year about the abnormal character of Kerviel's dealings.
The magazine said Eurex had sent questions to the bank in November to which it received a reassuring reply two weeks later. Eurex then came back with questions on November 26, the magazine said, and answers were only given on December 10.
"The bank's supervisors maintain that they had found nothing abnormal," Le Nouvel Observateur reported, quoting a spokesman for Eurex. The exchange denied talking to the media.
So far French prosecutors have said Eurex contacted SocGen in November without saying how the bank responded.
SocGen has said Kerviel was able to hide his trades using his experience in the bank's middle office, which keeps records and processes transactions and has computer expertise.
But his lawyer's computer expert denied this.
"Jerome, it has to be repeated, is no computer genius," Lemaire was quoted as saying. But he said Kerviel was thinking about starting a new career -- in information technology.
(Reporting by Astrid Wendlandt, editing by Will Waterman)
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