Rogue SocGen trader "a genius of fraud"
PARIS (Reuters) - The trader blamed for the world's biggest banking fraud was a junior banker who used his intimate knowledge of Societe Generale's risk control systems to conceal months of illegal dealing, the bank and insiders said on Thursday.
Sources within SocGen named the dealer as 31-year-old Jerome Kerviel, who worked on the bank's European equities derivatives desk at its Paris headquarters and earned less than 100,000 euros ($146,500) a year.
SocGen accused the trader of taking "massive fraudulent" positions in 2007 and 2008 on European equity market indices, leaving them nursing 4.9 billion euros of losses as they unwound the positions in wildly turbulent markets this week.
A senior bank board member told Reuters that Kerviel "was not a star," but Bank of France Governor Christian Noyer told reporters that the rogue trader was a "genius of fraud."
Kerviel was last seen at SocGen on Sunday prompting speculation he since may have fled or be hiding, but a woman identified as his lawyer by French television said he was ready to speak with authorities.
"He is not running away. He is at the disposal of the police," lawyer Elisabeth Meyer told BFM-TV late on Thursday.
Meyer, a well-known Parisian lawyer, was not immediately reachable.
The problem came to light at the end of last week, and Kerviel met bank executives face-to-face at the weekend as they tried to unravel the web of deceit that cut through all the company's supposedly sophisticated safety mechanisms.
"It turns out that this was possible because it happened to be someone who had knowledge of the internal control systems from his earlier career and who is no doubt a computer genius," Noyer told a press conference.
Kerviel joined SocGen in 2002 and was trading in one of the most basic financial instruments in the complex world of derivatives -- futures contracts on European equity indices.
It appears that he bet massively and mistakenly on a rise of European equity indices.
SNOWBALLED
One banking insider estimated that the loss was worth "just" one billion euros at the weekend, but it rapidly snowballed when SocGen moved to purge their books on Monday and Tuesday as European stock markets plunged.
"These losses could have been gains if the market had climbed on Monday, Tuesday and Wednesday," Societe Generale Chairman Daniel Bouton told a news conference.
As a junior staffer, there were strict limits on the positions he could take, but he knew how to bypass these controls because of five years spent at the back and middle office of the bank at the start of his career. Continued...
