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French rogue trader 'did not act alone'

Latest update : 2008-05-23

Banking giant Société Générale said on Friday that its former trader Jérôme Kerviel, blamed for the loss of 4.9 billion euros, had an assistant trader as an accomplice, and called Kerviel's managers 'negligent'.

Accused Societe Generale rogue trader Jerome Kerviel almost certainly had an accomplice in the huge deals which the French bank says cost it 4.9 billion euros (7.1 billion dollars), according to an internal report released Friday.

The report accused bank managers of being “negligent” in their oversight of the junior trader.

“Several operations of a fraudulent nature by Jerome Kerviel were processed by this assistant trader,” said the report, which also spoke of an electronic message which indicated the assistant knew the result of Kerviel’s “fraudulent transactions.”

The bank says it made the losses unwinding about 50 billion euros in unauthorised share deals by Kerviel. But the report said there was no sign of fraud by Kerviel for personal profit.

Kerviel, 31, has been charged with breach of trust, fabricating documents and illegally accessing computers. He is free on bail and has denied any wrongdoing, insisting that Societe Generale managers knew about his massive deals on European markets.

“The fraud was facilitated, or its detection delayed, by supervisory weaknesses over the trader and the market activities checking,” said the report which was ordered by a special committee set up after the scandal rocked the French bank.

“The trader’s hierarchy, which constituted the first control level, showed itself negligent in the supervision of his activities,” said the report.

Kerviel’s immediate superior “showed inappropriate tolerance to the positions taken” by the trader. It said Kerviel did not have enough experience of market trading and should have had more direction.

Date created : 2008-05-23