The court ruled that he should be detained because of the "necessities of the investigation" and the risk that he could flee the country.
Who is to blame?
Thursday 31 January 2008 No Défense
France continued to reel at the scale of the trading scandal at Société Générale, the country's second biggest bank. Jérôme Kerviel, the trader said to be responsible for a euro4.9 billion ($7.2 billion) loss, was placed under formal investigation by the courts for forgery and breach of trust. France's president, Nicolas Sarkozy, dropped a strong hint that Daniel Bouton, SocGen's boss, and other executives should go. SocGen's board disagreed, giving Mr Bouton a unanimous vote of confidence. See article
Wednesday 30 January 2008 Societe board begins crisis talks
Directors at scandal-hit Societe Generale begin talks to decide the fate of the bank's head, Daniel Bouton.
Tuesday 29 January 2008 The man at the centre of a huge bank fraud at Societe Generale was charged on Monday with breach of trust and two other related charges. The prosecutor said that Jerome Kerviel admitted during two days of questioning that he carried out acts to conceal reckless positions on the markets, but he did not profit personally from the financial deals. Jean-Claude Marin said that Mr. Kerviel wanted to be seen as an exceptional trader who was attracted by a 300 thousand Euro bonus. According to the allegations, his scam cost the Societe-Generale almost five billion Euros, or more than CDN$7 billion. After the charges were laid, Mr. Kerviel was released on bail.
French bank 'had trader warning'
Societe Generale was warned about alleged rogue trader Jerome Kerviel last year, a prosecutor says.
Monday 28 January 2008
A French Style of Capitalism Is Now Stained
Société Générale, the French bank that earned the respect of it rivals, is now embarrassed by a rogue trader.
PARIS — In a country where the hurly-burly of market capitalism has long been viewed with suspicion, Société Générale was a rare Gallic success story — the Chanel or Château Margaux of French banking.
Bank Outlines How Trader Hid His Activities
Société Générale said a junior trader who racked up more than $7 billion in losses misused computer access codes and falsified documents.
Monday 28 January 2008 French trader 'concealed deals'
French trader Jerome Kerviel has admitted to hiding deals that lost his bank billions, prosecutors say.
PARIS — The French bank Société Générale, facing persistent questions over how a lone, junior trader could have instigated more than $7 billion in losses, acknowledged on Sunday that his activities prompted questions from risk managers several times last year, but that the bank never began an investigation because his explanations defused any suspicions.
Sunday 27 January 2008 Police in France on Saturday took Jerome Kerviel into custody for questioning to determine his role in the loss of billions of dollars at the country's second-largest bank, Societe Generale. Mr. Kerviel worked as a trader at the bank. His whereabouts were unknown on Thursday, when the bank announced that it had uncovered a fraud that led to huge losses. On Friday, police raided Mr. Kerviel's apartment in a wealthy Paris suburb. The bank has taken legal action against Mr. Kerviel, accusing him of falsifying documents and gaining access to computer files without permission. The bank has denied making errors in its security, but the head of the European Central Bank has called for better self-regulation among Europe's banks.
Saturday 26 January 2008 The French government demanded a full accounting Friday of how a rogue trader at Societe Generale managed to lose 7-billion dollars, as it emerged he gambled on over 73 billion dollars - more than the bank's current value. Societe Generale said a single Paris trader, named by bank sources as 31-year-old Jerome Kerviel, amassed the losses, virtually wiping out the bank's 2007 profit and leaving it as a potential takeover target. Societe Generale has suspended its trader and filed a criminal complaint, but a source at the Paris prosecutors office said it was too early to say what charges, if any, he would face. The trader's whereabouts were unknown, but his lawyer says he's "not on the run."
Friday 25 January 2008 Rogue trader scandal broadens out Questions have been raised over the effects on the markets of the rogue trader who lost 4.9bn euros ($7.1bn; £3.7bn) at Societe Generale.
Friday 25 January 2008 Société Générale Le rogue trader
An astounding €4.9 billion fraud ($7.2 billion) before taxes
Friday 25 January 2008 Did rogue trader set off world market panic?
Jérôme Kerviel believed that he was executing a brilliant trading strategy.
Instead, the trader’s activities over the past year appeared yesterday to
have cost his employer, Société Générale, €4.9 billion (£3.7 billion), and
fuelled a global crisis in stock markets.
The 31-year-old’s web of lies and trades began to unravel late on Friday, as
his supervisors spotted an anomaly in his handling of futures contracts on
European stock market indices. On Saturday Mr Kerviel was hauled into the
bank’s Paris offices where he was questioned by Jean-Pierre Mustier,
SocGen’s head of investment banking, and confessed to making a series of
unauthorised bets on CAC, DAX and the EuroStoxx 50.
Factbox: Major trading scandals
Reuters
Published: Thursday, January 24French bank Societe Generale said fraud by a single trader had caused it a 4.9 billion euro ($7.1 billion) loss and that it would seek emergency funds as a result, shocking battered markets.
Here is a list of some of the major financial markets trading frauds in recent years:
Nov. 1989 - Michael Milken, known as the junk bond king when he headed bond operations at U.S. investment bank Drexel Burnham Lambert, was sentenced to 10 years in jail for securities fraud. Drexel filed for bankruptcy after being fined $650 million in fines and restitution.
April 1992 - Indian banks and brokers were accused of colluding illegally to siphon $1.3 billion from the inter-bank securities market to fuel a boom on the Bombay Stock Exchange. Top broker Harshad Mehta, the main person accused in the scandal, died in jail during the trial.
Ewan McGregor as Nick Leeson in Rogue Trader.
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Feb. 1995 - One of Britain's oldest investment banks, Barings Plc, collapsed after lone futures trader in Singapore, Nick Leeson, lost some $1.4 billion in derivatives trading. Leeson was jailed in Singapore. Barings was subsequently sold to Dutch bank ING (ING.AS) for one pound.
Sept. 1995 - Japan's Daiwa Bank suffered a $1.1 billion loss from unauthorised bond trading by Toshihide Iguchi, one of its executives in the United States. He was imprisoned in 1996.
June 1996 - Japan's trading house Sumitomo Corp suffered a $2.6 billion loss over 10 years from unauthorised copper trades, primarily by chief copper trader Yasuo Hamanaka. Sumitomo fired Hamanaka, once dubbed "Mr Five Percent" because his trading team was believed to control five percent of the world's copper trading. He was later jailed for eight years.
Jan. 2001 - Former chief financial officer of the now-defunct Griffin Trading Co., Scott Szach, was charged with diverting more than $5.56 million from a company bank account to a brokerage trading account to fund unauthorised trading in the 18 months before the firm's demise.
Sept. 2001 - Merrill Lynch fired two senior executives for their failure to supervise a currency dealer who diverted profits on foreign exchange deals to favoured clients, leaving the bank facing a $10 million bill.
Feb. 2002 - Ireland's largest bank Allied Irish revealed a rogue U.S. trader John Rusnak had defrauded its U.S. subsidiary of up to $750 million. Rusnak was sentenced in January 2003 to 7-1/2 years in prison. He admitted devising a scheme that netted him $850,000 in salary and bonuses from 1997 to 2001.
March/April 2006 - Hedge fund Amaranth Advisors LLC and its former head trader, Brian Hunter, tried to manipulate gas futures contracts on the NYMEX in 2006. Amaranth racked up $6.4 billion in losses from the bad natural gas contracts before it folded in 2006. In July 2007 the Commodity Futures Trading Commission charged Amaranth and Brian Hunter, with trying to manipulate natural gas futures prices.
© Reuters 2008
Rogue Trader
July 1, 2007
The story of futures trader Nick Leeson, the man who brought Barings Bank to its knees.
This is the disturbing story of futures trader Nick Leeson, who punted other people's money in reckless deals that came unstuck and brought the venerable Barings Bank to its knees. Doubtless, viewers who have had their life savings frittered away by unconscionable ratbags on the world's currency exchanges or in reprehensible stockmarket plays conducted by the scum of the Earth will find much in Leeson's heartbreaking story to engage their sympathy. Ewan McGregor and Anna Friel (having a busy week) star and the unsavoury behaviour on display is equalled by a good deal of less-than-couth language.
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© 2008 David T. Nicholson
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