Rogue trader Kerviel stays in custody

Jérôme Kerviel, the trader accused of losing €4.9bn ($7.2 billion) through
unauthorised dealing at Société
, 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,

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

story in the Financial Times

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