Business | Banking
Paris broker faces probe in SocGen case
A Paris broker was due to appear before an investigating judge on Saturday as part of a widening probe into the rogue trading scandal at French bank Societe Generale, the prosecutor's office said.
- Reuters
- Published: 00:45 February 10, 2008
Paris: A Paris broker was due to appear before an investigating judge on Saturday as part of a widening probe into the rogue trading scandal at French bank Societe Generale, the prosecutor's office said.
Confirming his identity as Moussa Bakir of the brokerage Newedge, prosecutors said they would ask the judge to place him under formal investigation on suspicion that he cooperated in illicit deals carried out by SocGen trader Jerome Kerviel.
Kerviel's $73 billion wrong-way gamble on the share market has been blamed by SocGen for a $7 billion trading loss, the biggest arising from unauthorised trading in banking history.
The investigating judge could decide to put Bakir under formal investigation for "conspiracy to commit breach of trust," a judicial source said.
Being placed under investigation in France may lead to trial but is a step short of charges and does not imply guilt.
Kerviel is already under formal investigation on three counts that include breach of trust.
Kerviel, 31, spent the night in a Paris prison after being placed in temporary custody on Friday when an earlier decision to grant him bail was overturned.
Prosecutors are asking that Bakir also be placed in temporary detention while the investigation continues.
Bakir's employer Newedge executes trades on behalf of SocGen, the world's leading bank in equity derivatives and the second-biggest listed bank in France by market value.
Documents seized by police who raided Newedge's office on Thursday show that Kerviel and Bakir had frequent e-mail exchanges, prosecutors said.
Newedge incorporates a former SocGen brokerage called Fimat and since last month it has been co-owned by SocGen and the investment banking arm of Credit Agricole. Rebuffing criticism of its risk control systems, Societe Generale has said Kerviel acted alone in the trading affair by building up unhedged futures positions and faking paperwork.
Kerviel has acknowledged carrying out unauthorised trades but says his supervisors must have known of his activities and that he was only trying to make money for the bank.
Kerviel is being investigated for suspected breach of trust, manipulation of computer records and falsification, but was originally freed on bail after investigating magistrates dropped fraud accusations from the charge sheet.
If the investigation finds that others had a hand in Kerviel's illicit trades, legal experts say prosecutors may try to re-examine whether to press fraud charges.
Links
Jean Veil, a lawyer for Societe Generale, which unveiled the trading scandal more than two weeks ago, said the links between the two men had made Kerviel's detention necessary.
"The two [Kerviel and Bakir] were friends. They spoke to each other. Was the broker in custody aware of things? Has he helped? The inquiry will find out," Veil told RTL radio.
"This is the reason why I think a detention [of Kerviel] was necessary," he added. "This allows the inquiry to completely deploy while being sure that no proof will disappear."
Kerviel's lawyer says she will lodge an appeal with France's highest court against the decision to cancel his bail.
The trading scandal, which shook France's political and financial establishment, has forced SocGen to announce a 5.5 billion euro rights issue to repair its balance sheet.
A source close to the matter said SocGen's board planned to meet this weekend to finalise details of the issue, which is expected to be launched next week.
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