French Court Orders Rogue Trader`s Detention

By Reuters -  |  Posted 2008-02-08 Email Print this article Print
 
 
 
 
 
 
 

A French court ordered the detention of Jerome Kerviel, the rogue trader blamed by Societe Generale for huge losses, as police questioned a second trader to establish whether he knew about Kerviel's illicit deals.

PARIS (Reuters) - A French court ordered the detention of Jerome Kerviel, the rogue trader blamed by Societe Generale for huge losses, as police questioned a second trader to establish whether he knew about Kerviel's illicit deals.

The Paris appeals court ruled on Friday that Kerviel should be held in custody for the duration of the investigation because of a risk he might try to abscond.

A second trader was also being questioned by police, a source familiar with the matter told Reuters. This trader worked at Newedge, a brokerage that executed orders on behalf of Kerviel, the source said.

A separate legal source, who confirmed earlier that police were questioning an unidentified trader, said his initial 24-hour detention period had been extended by another day.

The brokerage is a SocGen subsidiary formerly known as Fimat but renamed Newedge this year after it was wholly acquired by Calyon Financial. 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's illicit trades, prosecutors may have new grounds to press fraud charges.

The latest twist comes at a time when Societe General is working on a rights issue to raise 5.5 billion euros to repair its balance sheet after the trading losses and write-downs linked to the U.S. subprime mortgage crisis.

One source close to the matter said SocGen's board plans to meet this weekend to finalize details of the issue, which is expected to be launched 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 of trust, computer abuse and falsification, but had been freed under judicial supervision on January 28 after investigating magistrates dropped fraud accusations from the charge sheet.

Kerviel told Agence France Presse news agency in an interview on Tuesday that he accepted his share of responsibility for the losses but did 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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