Business | Banking

SocGen to fight US subprime loss suit

Societe Generale said it would defend itself against a US class action suit alleging the French bank misled investors about its exposure in the subprime mortgage markets and failed to act on information about trades by rogue trader Jerome Kerviel.

  • Reuters
  • Published: 00:46 March 23, 2008
  • Gulf News

Paris: Societe Generale said it would defend itself against a US class action suit alleging the French bank misled investors about its exposure in the subprime mortgage markets and failed to act on information about trades by rogue trader Jerome Kerviel.

"Societe Generale intends to defend itself vigorously against these claims," the bank said.

The bank said it had picked Skadden, Arps, Slate, Meagher and Flom to lead its defence.

In January, SocGen unveiled 4.9 billion euros ($7.58 billion) of losses which it blamed on rogue deals carried out by Kerviel, a 31-year-old junior trader at the bank.

The trading losses and write-downs of 2.9 billion euros, related to the credit market turmoil triggered by losses in the US housing market, forced SocGen to launch a 5.5 billion euro rights issue and made the French bank a possible bid target.

False statements

US law firm Cohen Milstein Hausfeld and Toll has said its complaint, filed in federal court in New York, alleged SocGen made false and misleading statements and concealed material adverse information regarding the bank's exposure to subprime loans, collateralised debt obligations and internal controls.

The lawsuit seeks to represent all purchasers of SocGen American Depository Receipts and all US purchasers of the bank's shares on overseas exchanges between August 1, 2005, and January 23, 2008.

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