French rogue trader acted alone, internal inquiry finds

21st February 2008, Comments 0 comments

Rogue trader Jerome Kerviel acted alone in the investment banking scandal which cost Societe Generale almost five billion euros

PARIS, February 21, 2008 - Rogue trader Jerome Kerviel acted alone in the investment banking scandal which cost Societe Generale almost five billion euros, an internal inquiry found Wednesday. The inquiry commissioned by the French banking giant found "no evidence of embezzlement or of internal or external complicity" as the 31-year-old made trades which ultimately cost the bank 4.8 billion euros (7.1 billion dollars). But the inquiry, chaired by former Peugeot Citroen chief executive Jean-Martin Folz, found flaws in the bank's monitoring systems, namely the absence of controls likely to identify fraud. Kerviel, arrested earlier this month, faces charges of breach of trust, fabricating documents and illegally accessing computers in connection with the biggest investment banking scandal in history. The bank has always maintained that he acted alone. "Investigations are continuing notably on a wider front than the activities of the author of the fraud," the preliminary report from the inquiry said. It said the bank's internal controls were generally effective and its failure to identify the "fraud" could be partially explained by the "variety of the techniques" Kerviel used to hide his activities. A trader who worked for a Societe Generale subsidiary, Fimat, was released after questioning earlier this month. He has been designated an assisted witness, a French legal term halfway between a witness and being charged. Kerviel's lawyer has appealed against a prosecution demand that he be held in custody, revoking bail set by a lower court, pending further investigations into what Societe Generale says were unauthorised trades worth at least 50 billion euros, more than the bank's capital.

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