Societe Generale Agrees to Keep Chairman Despite Trading Scandal

30 January 2008 -- The board of the French bank Societe Generale has decided to keep chairman Daniel Bouton in his post despite increasing pressure for his resignation following a $7 billion trading scandal at the institution.

The board of directors announced the unanimous decision after crisis talks Wednesday. The board had called the meeting to discuss a strategy to avoid further upheaval that could lead to a hostile takeover of the bank.

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Bouton offered to step down last week after the bank announced it had uncovered the trading scandal. But the board rejected his resignation, asking him to lead the bank out of the current turmoil.

The board today also announced it will set up an independent committee to investigate the losses blamed on young trader Jerome Kerviel.

The trader has accused his bosses at Societe Generale of turning a blind eye to his fraudulent activities.

French prosecutors Monday placed Kerviel under formal investigation after he admitted faking successful trades to cover $7 billion in losses from bad trades at Societe Generale.

Officials from the Paris prosecutor's office confirm Kerviel told police he cannot believe managers were unaware of what he was doing. He said it is impossible to generate such huge profits with the small amount of money he was allowed to handle.

The bank has fired Kerviel and several supervisors. It is not yet clear if he will be formally charged.

Source: VOA News