02/09/2008
A Paris court on Friday ordered French trader Jerome Kerviel to be jailed while investigations continue into billions of euros (dollars) in losses he allegedly caused at Societe Generale bank.
Also on Friday, the legal probe into the case broadened, with police holding a brokerage employee who reportedly had been in contact with Kerviel, a 31-year-old futures trader.
The judges' decision to jail Kerviel came after prosecutors said they were concerned he might contact accomplices, if he had any, jeopardizing what promises to be a long and complex probe. "I think this decision is coherent with the dossier, especially in view of the importance of the losses caused by manoeuvres admitted by Mr Kerviel", Jean Veil, a lawyer representing Societe Generale told reporters. "He is obviously responsible for it".
Elisabeth Meyer, a lawyer representing Jerome Kerviel, said she would appeal the decision on Monday. Judges had allowed Kerviel to go free last month, after his lawyer argued he did not pose a flight risk. News that police had arrested a second person, an employee at a brokerage arm of Societe Generale, again raised the question of whether Kerviel acted alone.
Societe Generale, one of France's biggest banks, has said Kerviel did not appear to have accomplices when he made massive unauthorized bets on European futures markets that the bank said cost it nearly 5 (b) billion (more than 7 (b) billion US dollars) to unwind. But the daily newspaper Le Monde reported on Friday that the bank has turned over new evidence, including a message sent to Kerviel through the bank's computer system by the broker now in custody.
The message, sent November 30, read: "You have done nothing illegal in terms of the law", the newspaper said. The employee, who worked at Newedge, a 50-50 joint venture between Societe Generale and Calyon bank, was taken into custody on Thursday and was still being held Friday, said a judicial official who refused to be identified because of the sensitivity of the case.
Joelle Rosello, a Societe Generale spokeswoman, confirmed the employee was in custody, and said the bank was cooperating closely with police. Le Monde said Kerviel passed some trades through the brokerage, and that police suspect that the brokerage employee was aware of Kerviel's activities. It said the brokerage was searched Thursday.
Societe Generale announced on January 24 that it lost 4.82 (b) billion euro (7.09 (b) billion US dollars) in cleaning up Kerviel's unauthorised transactions. It said Kerviel overstepped his authority and bet 50 (b) billion euros (73 (b) billion US dollars) - more than the market value of the entire bank - on futures in European equity markets. It also said he did not appear to have profited personally from the trades.
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