SocGen trader Kerviel held for questioning: source

Paris: Police have taken into custody the trader blamed for a $7 billion fraud at French bank Societe Generale, a judicial source said on Saturday.

Jerome Kerviel was taken to a police station in Paris at around 2.00 p.m. (1300 GMT).

The young trader has not been seen in public since SocGen stunned the financial world on Thursday when it unveiled the record trading loss.

Financial police in Paris were to question Kerviel as part of a probe into Societe Generale's announcement Thursday that the 31-year-old trader had put tens of billions of dollars at risk in one of history's biggest frauds, judicial officials said. They spoke on condition of anonymity because the investigation is ongoing.

Under French law, suspects can be held for an initial 24-hour period before any charges are pressed, but this can be extended.

The French investigators have stepped up efforts to find out how a self-effacing dealer ran up a $7 billion loss that hoodwinked his employers.

Police on Friday visited the headquarters of Societe Generale where Kerviel worked until his dismissal last week, poring over his computer records, and also searched the apartment where he lived on the western outskirts of Paris.

Kerviel's family say he is being made a scapegoat for the world's worst rogue trading scandal.

The investigation is intensifying as authorities put pressure on SocGen's managers to explain how a bank which won accolades for innovation and boasted state-of-the-art risk controls could be tripped up by a rogue trader acting alone.

France's Economy Minister Christine Lagarde said on Saturday she would report shortly to Prime Minister Francois Fillon on SocGen's woes and would assess whether new legislation might be needed to ward off a repeat of the scandal.

The report would assess "how and why the controls did not work, and what additional controls are required, including appropriate legislation to avoid [this] occurring again," she told reporters at the World Economic Forum meeting in Davos.

Modus operandi: Like 'a mutating virus'

Kerviel was able for months to keep one step ahead of his supervisors by manipulating fictitious trades and evading checks like "a mutating virus", SocGen's executive chairman Daniel Bouton said in an interview.

Jean-Pierre Mustier, head of SocGen's investment banking unit, told the Financial Times the rogue trader was managing hundreds of thousands of concealed trades and an equal number of fake hedges to give the appearance that any loss was offset. "Every two or three days, he was changing his position. He would input a transaction that would trigger a control in three days and before that happened he would replace it with a different one," Mustier was quoted as saying.

- Reuters