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French bank 'had trader warning' French bank 'had trader warning'
(about 3 hours later)
French stock market officials warned Societe Generale about alleged rogue trader Jerome Kerviel late last year, a Paris prosecutor has said.French stock market officials warned Societe Generale about alleged rogue trader Jerome Kerviel late last year, a Paris prosecutor has said.
With Mr Kerviel now released on bail, the prosecutor's comments increase the pressure on the bank to explain why his trades were not discovered earlier.With Mr Kerviel now released on bail, the prosecutor's comments increase the pressure on the bank to explain why his trades were not discovered earlier.
Mr Kerviel is being investigated for breach of trust, falsifying documents and breaching computer security.Mr Kerviel is being investigated for breach of trust, falsifying documents and breaching computer security.
Societe Generale says his actions cost it 4.9bn euros ($7bn; £3.7bn).Societe Generale says his actions cost it 4.9bn euros ($7bn; £3.7bn).
'Thrown to the dogs' 'Crisis situation'
The bank, which says it only discovered Mr Kerviel's unauthorised trades 10 days ago, had been pressing for Mr Kerviel to face the more serious charge of fraud.The bank, which says it only discovered Mr Kerviel's unauthorised trades 10 days ago, had been pressing for Mr Kerviel to face the more serious charge of fraud.
When there is an event of this nature, it cannot remain without consequences as far as responsibilities [of senior managers] are concerned French President Nicolas Sarkozy Mr Bouton held this unfortunate man up for public vilification, threw him to the dogs... and there was no substance to it Defence lawyer Christian Charriere-Bournazel
His lawyer, Elisabeth Meyer, on Monday called the judges' decision not to press for fraud charges a "great victory".His lawyer, Elisabeth Meyer, on Monday called the judges' decision not to press for fraud charges a "great victory".
Mr Kerviel's other lawyer, Christian Charriere-Bournazel, said his client had committed no fraud, adding that Societe General's chief executive Daniel Bouton had no evidence to back up his allegations. As police investigations into Mr Kerviel's actions continue, French politicians are increasing the pressure on Societe Generale's embattled chairman and chief executive Daniel Bouton.
"The word fraud was used by Mr Bouton numerous times," he said. "Societe Generale is in a crisis situation," said Economy Minister Christine Lagarde in an interview on French television.
"Mr Bouton held this unfortunate man up for public vilification, threw him to the dogs... and there was no substance to it." "In a difficult moment, the board members are there to decide if the person in charge is the best placed to run the ship when it is pitching a bit, or whether they should change the captain."
French President Nicolas Sarkozy has already said that the bank's senior managers had to accept their share of responsibility for the scandal.
'Invented deals''Invented deals'
Societe Generale says Mr Kerviel had a position, or a bet, worth about 50bn euros on the future direction of European shares.Societe Generale says Mr Kerviel had a position, or a bet, worth about 50bn euros on the future direction of European shares.
SOCIETE GENERALE IN FIGURES Founded in 1864467bn euros in assets under management (as of June 2007)22.5 million customers worldwide120,000 employees in 77 countries Societe Generale share priceSOCIETE GENERALE IN FIGURES Founded in 1864467bn euros in assets under management (as of June 2007)22.5 million customers worldwide120,000 employees in 77 countries Societe Generale share price
That was more than the bank's value - about 35bn euros - and about the size of France's entire annual budget deficit.That was more than the bank's value - about 35bn euros - and about the size of France's entire annual budget deficit.
To avoid that potentially catastrophic loss the bank had to unwind Mr Kerviel's trades, but that still cost it 4.9bn euros.To avoid that potentially catastrophic loss the bank had to unwind Mr Kerviel's trades, but that still cost it 4.9bn euros.
Societe Generale said Mr Kerviel's background in handling the administration of trades enabled him to fool those monitoring traders' activities.Societe Generale said Mr Kerviel's background in handling the administration of trades enabled him to fool those monitoring traders' activities.
It says Mr Kerviel invented deals that, on paper, balanced out his bets.It says Mr Kerviel invented deals that, on paper, balanced out his bets.
'No evidence'
Mr Kerviel's other lawyer, Christian Charriere-Bournazel, said his client had committed no fraud, adding that Societe Generale's chief executive Daniel Bouton had no evidence to back up his allegations.
"The word fraud was used by Mr Bouton numerous times," he said.
"Mr Bouton held this unfortunate man up for public vilification, threw him to the dogs... and there was no substance to it."
Under French law breach of trust carries a maximum sentence of three years in prison and a fine of 370,000 euros ($546,637; £186,562).Under French law breach of trust carries a maximum sentence of three years in prison and a fine of 370,000 euros ($546,637; £186,562).
While a formal investigation has started into Mr Kerviel's actions, this does not automatically guarantee that a trial will follow.While a formal investigation has started into Mr Kerviel's actions, this does not automatically guarantee that a trial will follow.
French President Nicolas Sarkozy has said that Societe Generale's senior managers would have to accept their share of responsibility for the scandal.
"When there is an event of this nature, it cannot remain without consequences as far as responsibilities [of senior managers] are concerned," he said.