Police Widen SocGen Probe

PARIS (Reuters) – A French inquiry into a record 4.9 billion euros ($7.17 billion) trading loss at Societe Generale widened to a second broker on Friday as investigators sought to establish whether rogue trader Jerome Kerviel acted alone.

The news emerged as a court prepared to rule on whether Kerviel, the31-year-old trader blamed by Societe Generale for huge unauthorizeddealings, should be taken into custody.

A legal source familiar with the matter said police were questioninga trader at a brokerage that executed orders on behalf of Kerviel. Thesource said an initial 24-hour detention period had been extended byanother day.

The brokerage is a SocGen subsidiary formerly known as Fimat butrenamed this year as Newedge after it merged with Calyon Financial. Thebrokerage’s offices were raided by police on Thursday.

If the investigation establishes that others were involved inKerviel’s illicit trades, prosecutors may have new grounds to pressfraud charges.

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 was freed under judicialsupervision on January 28 after investigating magistrates dropped fraudaccusations from the charge sheet.

The Paris prosecutor’s office appealed against that decision, and the appeal hearing is due to be heard from 1300 GMT on Friday.

The prosecutor first said he feared for Kerviel’s psychologicalstate but has asked the court to put Kerviel in detention because ofconcern he could abscond.

"It is necessary to verify whether Kerviel profited personally," Ulrika Weiss, spokeswoman for the prosecutor, said on Thursday.

Societe Generale accuses Kerviel of unauthorized trades which led toa record 4.9 billion-euro loss when it closed out his positions.

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.

Societe General is working on a 5.5 billion-euro rights issue torepair its balance sheet after the trading losses and write-downslinked to the U.S. subprime mortgage crisis. The rights issue isexpected to be launched next week.

(Additional reporting by Nick Antonovics, Andrew Hurst and Marcel Michelson; Editing by Quentin Bryar)

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