Kerviel`s Losses Said to Be $3.2 billion in June 2007

PARIS (Reuters) – Jerome Kerviel, the trader blamed by SocieteGenerale 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 lawyertold Paris Match.

The French bank unveiled 4.9 billion euros of trading losses lastmonth but has since said that Kerviel was 1.4 billion euros ahead atthe 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 toldhim about the end-year gain, Jean-Raymond Lemaire said, "Of course. Healso told me about a 2.2 billion euro loss in June 2007. In his job, towin 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 marketderivatives was not negative on Friday January 18. The bank discovereddiscrepancies that uncovered his activities later that evening.

It unwound 50 billion euros of futures bets taken out by Kerviel insteeply falling markets on January 21-23 before shocking the bankingworld by announcing the heavy losses on January 24.

"It is not Jerome Kerviel who lost 4.9 billion euros," Lemaire said.

EUREX WARNINGS

Separately, French weekly Nouvel Observateur said Eurex, thederivatives exchange and clearing house, alerted SocGen twice late lastyear about the abnormal character of Kerviel’s dealings.

The magazine said Eurex had sent questions to the bank in Novemberto which it received a reassuring reply two weeks later. Eurex thencame back with questions on November 26, the magazine said, and answerswere only given on December 10.

"The bank’s supervisors maintain that they had found nothingabnormal," Le Nouvel Observateur reported, quoting a spokesman forEurex. 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 hisexperience in the bank’s middle office, which keeps records andprocesses transactions and has computer expertise.

But his lawyer’s computer expert denied this.

"Jerome, it has to be repeated, is no computer genius," Lemaire wasquoted as saying. But he said Kerviel was thinking about starting a newcareer — in information technology.

(Reporting by Astrid Wendlandt, editing by Will Waterman)

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