Rogue trader Kerviel stays in custody
After 24 hours in police custody rogue Société Générale trader Kerviel continues to be questioned
Jérôme Kerviel, the trader accused of losing €4.9bn ($7.2 billion) through
unauthorised dealing at Société
Générale, France’s second-largest lender by market value, remains in custody
for police questioning.
Société Générale said the losses – the biggest in the bank’s history –
occurred when Kerviel set up positions in futures linked to European stock
indexes and hedged them with fictitious trades.
The positions were in balance at midday on Friday January 18 but European
stock markets fell at an average of about 2% that day and Société Générale
managers did not become aware of the fraud until the following Monday when the
losses had ballooned to €4.9bn,
Bloomberg
reports.
Last Saturday, Daniel Bouton, Société Générale chairman, maintained Kerviel
acted alone, but Jean-Pierre Mustier, head of the bank’s investment banking arm,
said Kerviel’s superiors had challenged his trades and missed several
opportunities to stop him.
‘He was always rolling one transaction into another,’ Mustier told the
Financial Times. ‘If he was ever caught, he just said it was a mistake
and would start putting the trade somewhere else.’
Further reading:
PKF warns of continued lack of controls
Société Générale announces massive write-down – and
fraud
Read
story in the Financial Times