Kerviel lawyer plans new defense of rogue trader

By Sudip Kar-Gupta and Thierry Leveque

PARIS (Reuters) - The new legal team for Jerome Kerviel, the banker blamed for a record rogue trading scandal, said on Wednesday it had a new defense strategy to put more pressure on Kerviel's former employer, Societe Generale (SOGN.PA).

Bernard Benaiem, Kerviel's new principal lawyer, said he would focus more on the role of Societe Generale, France's second-biggest listed bank, which posted record losses as a result of the Kerviel debacle.

On Jan 24, Societe Generale unveiled 4.9 billion euros ($7.7 billion) of losses that it said were caused by rogue deals carried out by Kerviel, then a 31-year-old junior trader.

The losses rocked world markets and eclipsed those of previous trading scandals, such as Nick Leeson's rogue trades that toppled British merchant bank Barings in 1995.

Following a court hearing on Wednesday, Benaiem told reporters his team had focused on a decision in July by France's Banking Commission to fine SocGen 4 million euros for serious breaches of internal controls over the Kerviel affair.

"This has allowed us to highlight a certain number of mechanisms that Kerviel has already criticized and which are today set in stone," he said.

Kerviel was freed from prison in March after an appeal against his detention, but he remains under formal investigation for breach of trust, computer abuse and falsification.

FACE TO FACE WITH SOCGEN EXEC

There have been several hearings in the case, but Wednesday marked one of Kerviel's first public appearances since he left La Sante prison in Paris in March.

Flanked by four lawyers and wearing a grey suit and tie, Kerviel ate at a pizza restaurant nearby before striding confidently toward the court. He declined to comment to reporters.

Also present at Wednesday's hearing was Christophe Mianne, one of the top managers of the SocGen equity derivatives division in which Kerviel had worked.

SocGen lawyer Jean Veil declined to comment to reporters after the hearing, although before the hearing he expressed surprise at the change of strategy from Kerviel's camp.

One key aspect of the case is to determine to what extent SocGen might have been negligent in its supervision of Kerviel.

SocGen has published several internal reports on the Kerviel affair. These reports show Kerviel started building up non-authorized trading positions in 2005 and 2006 for "small amounts," which got bigger from March 2007 onward.

By the time SocGen discovered what was going on in late January, Kerviel had amassed a position worth 49 billion euros -- greater than SocGen's own stock market value. The French bank had to unwind this position between January 21 and January 23 into an already falling stock market.