01/28/2008
A Paris prosecutor on Monday asked for preliminary charges of forgery, breach of trust and fraud against Jerome Kerviel, who has been accused by Societe Generale bank of causing the largest-ever trading fraud by a single person.
The prosecutor, Jean-Claude Marin, also for the first time gave an inkling about what motivated the low-level trader.
He said the 31-year-old did not seek personal profit and had not sought to despoil the bank but wanted to be "an exceptional trader" and earn performance bonuses. Marin said Kerviel, who has been in police custody since Saturday, fully cooperated with police and admitted a certain number of acts.
Marin was speaking as police wrapped up nearly 48 hours of questioning Kerviel. The trader was to appear before a judge who would decide whether to proceed with preliminary charges.
Under French law, filing preliminary charges means the judge has determined there is strong evidence to suggest involvement in a crime. It gives the investigator time to pursue the probe before deciding whether to send the suspect for trial or drop the case. The prosecutor said Kerviel could face a maximum seven years imprisonment if convicted under the charges he was seeking.
Societe Generale revised downward slightly the amount Kerviel allegedly lost, from 4.9 (b) billion euros ($7.21 (b) billion US dollars) to just over 4.82 (b) billion euros ($7.09 (b) billion US dollars).
Even before his allegedly massive fraud came to light on Thursday, Kerviel's trading apparently triggered occasional alarms at Societe Generale, France's second-largest bank, but not to a degree that led managers to investigate further. Societe Generale alleges that Kerviel hacked computers and "combined several fraudulent methods" to build up positions worth 50 (b) billion euros ($73.53 (b) billion US dollars), more that the bank's market worth.
The bank says Kerviel built up futures positions worth 30 (b) billion euros ($44.12 (b) billion US dollars) into the Eurostoxx index, another 18 (b) billion euros ($26.47 (b) billion US dollars) on Germany's DAX and 2 (b) billion euros on the London FTSE. Since the bets greatly exceeded the amount of capital he was allowed to risk, Kerviel allegedly entered fake and offsetting trades in Societe Generale's computer system that appeared to minimize the odds of big losses, the bank said.
The trades were purposely chosen to avoid detection because they did not require cash contributions nor were subject to margin calls, which would require putting up more money if the fake bet soured, the bank alleged. Societe Generale said Kerviel's positions were unwound last week over three days in a controlled fashion.
Societe Generale alleged that Kerviel used other people's computer access codes, falsified documents and used other methods to cover his tracks, helped by his previous experience in other offices at the bank which monitor traders.
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