French Bank Societe Generale Says Fraudulent Positions Worth $73 Billion

27 January 2008 -- French bank Societe Generale says the rogue stock trader suspected in one of the world's largest-ever bank frauds held market positions worth $73 billion when the fraud was discovered last week.

In a statement Sunday, the bank says action was taken last week to liquidate the deals, limiting losses to $7.2 billion.

The statement alleges that suspect Jerome Kerveil, 31, stole computer access codes from other bank employees and then falsified documents to cover his tracks. Officials say the suspect had used bogus futures trades to make large bets on the movement of European stock indexes.

Societe Generale has said Kerveil invented transactions to cover up mounting losses, presumably with hope of erasing the deficit through subsequent trades.

Police say the suspect surrendered voluntarily Saturday and has cooperated in the investigation.

The statement alleges the suspect was helped by his previous experience working in bank oversight offices that monitor traders.

Kerveil's lawyer says he is innocent, and no one is contending that his client profited from his activities.

Bank chairman Daniel Bouton has been criticized in the wake of the scandal. He disputes suggestions that Societe Generale's management made costly strategic errors, telling the newspaper Le Figaro Saturday that what has happened "is certainly not a disaster that resulted from [the bank's] strategy." He said the Kerviel affair "is more like an accidental fire that destroys a large factory at an industrial plant."

Source: VOA News

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