PARIS (Reuters) – A French court ordered the detention of JeromeKerviel, the rogue trader blamed by Societe Generale for huge losses,as police questioned a second trader to establish whether he knew aboutKerviel’s illicit deals.
The Paris appeals court ruled on Friday that Kerviel should be heldin custody for the duration of the investigation because of a risk hemight try to abscond.
A second trader was also being questioned by police, a sourcefamiliar with the matter told Reuters. This trader worked at Newedge, abrokerage that executed orders on behalf of Kerviel, the source said.
A separate legal source, who confirmed earlier that police werequestioning an unidentified trader, said his initial 24-hour detentionperiod had been extended by another day.
The brokerage is a SocGen subsidiary formerly known as Fimat butrenamed Newedge this year after it was wholly acquired by CalyonFinancial. Its offices were raided by police on Thursday.
French police are investigating a trading loss of 4.9 billion euros($7.1 billion) at Societe Generale which was revealed last month.SocGen has blamed Kerviel for the losses.
If the investigation establishes that others had a hand in Kerviel’sillicit trades, prosecutors may have new grounds to press fraud charges.
The latest twist comes at a time when Societe General is working ona rights issue to raise 5.5 billion euros to repair its balance sheetafter the trading losses and write-downs linked to the U.S. subprimemortgage crisis.
One source close to the matter said SocGen’s board plans to meetthis weekend to finalize details of the issue, which is expected to belaunched next week.
DETENTION
Societe Generale lawyer Jean Veil said it was "premature" to comment on the developments in the probe.
Kerviel has been placed under formal investigation for breach oftrust, computer abuse and falsification, but had been freed underjudicial supervision on January 28 after investigating magistratesdropped fraud accusations from the charge sheet.
Kerviel told Agence France Presse news agency in an interview onTuesday that he accepted his share of responsibility for the losses butdid not want to be made a scapegoat.
He said he conducted the trades to make money for the bank but was not seeking to enrich himself.
(Writing by Andrew Hurst; Additional reporting by Nick Antonovics, Andrew Hurst and Marcel Michelson; Editing by Quentin Bryar)
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