Paris broker released in SocGen trading case

PARIS (Reuters) - French judges dismissed conspiracy accusations against a Paris broker on Saturday, dealing a severe blow to the hunt for an accomplice to trader Jerome Kerviel in the rogue trading scandal at French bank Societe Generale.

The broker, named by prosecutors as Moussa Bakir of Paris brokerage Newedge, was brought before investigating judges after being questioned for 48 hours in police custody.

Prosecutors accused him of lending a hand as Kerviel placed a secret wrong-way bet on the share market which the bank blames for a $7 billion trading loss, marking the world's biggest rogue trading scandal. The bank's lawyer said the two were friends.

But investigating judges threw out the accusation of "conspiracy to commit a breach of trust," allowing Bakir to walk free from the Paris financial court as an ordinary witness rather than a suspect, and unnoticed by a crowd of journalists.

"Do not look for my client. He has left," Jean-David Scemama, the broker's lawyer, told reporters outside the court.

"You are dealing with a person who has recovered the status he had had since the start of the investigation, which is that of witness. He has not been placed under formal investigation."

The lawyer did not name his client, which is normal at this stage of an inquiry, but he was identified to the media by prosecutors and other sources familiar with the matter.

Prosecutors will not appeal against the decision by judges Renaud Van Ruymbeke and Francois Desset to let Bakir go, a spokeswoman at the prosecutors' office said.

Their decision -- taken in less than a quarter of an hour -- represents the second setback for prosecutors since the announcement of 4.9 billion euros of rogue trading losses at SocGen sent tremors through the financial world on January 24.

The same judges dismissed the central accusation of attempted fraud against 31-year-old Kerviel, though their decision to free him on bail was overturned on Friday.

Kerviel spent the night in a Paris prison. His lawyer says she will appeal to France's highest court to have him freed.

"FRIEND" OF KERVIEL

SocGen's chairman has labeled Kerviel a master fraudster and says he acted alone in defeating the bank's control systems by faking paperwork and misappropriating computer passwords.

Kerviel has admitted carrying out unauthorized trades but says he did not act for personal gain and that his supervisors must have known about his practice of trading beyond his limits, which at first actually made a profit for the bank.

With fraud accusations removed, Kerviel is being investigated for suspected breach of trust, manipulation of computer records and falsification.

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.

Being placed under investigation in France may lead to trial but is a step short of charges and does not itself imply guilt.

Kerviel's links with Bakir attracted attention because Newedge executes trades on behalf of SocGen (SOGN.PA), the world's leading bank in equity derivatives and the second-biggest listed bank in France by market value.

Prosecutors said documents seized by police who raided Newedge's office on Thursday showed that Kerviel and Bakir had frequent e-mail exchanges.

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 (CAGR.PA).

Speaking before the case against Bakir was dismissed, Societe Generale lawyer Jean Veil said the links between Kerviel and Bakir 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.

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 finalize details of the issue, which is expected to be launched next week.

(Writing by Marie Maitre and Tim Hepher; Editing by Jon Boyle)