Police search SocGen trader's apartment

By Sudip Kar-Gupta and Brian Rohan

PARIS (Reuters) - French police searched the apartment of the Societe Generale dealer blamed for running up a $7 billion loss on Friday, but his family said he was a scapegoat for the world's worst rogue trading scandal.

Jerome Kerviel, 31, has not been seen publicly since SocGen stunned the financial world by unveiling the record trading loss on Thursday, but a photograph of his frowning face has been splashed across newspapers and television screens.

Four plainclothes police officers were seen entering the third-floor apartment in the exclusive Paris suburb of Neuilly and when they left, each carried a large briefcase. They identified themselves as police but declined further comment.

The mystery over Kerviel's whereabouts has sparked a massive media hunt, with journalists out in force in Neuilly, his home town of Pont-l'Abbe in Brittany and near his workplace in the capital's financial area of La Defense. A relative said he was in the Paris area and "not doing well".

The crisis erupted on Thursday when SocGen said one of its most junior traders had wriggled through internal barriers to speculate massively on shares and then conceal his loss-making positions, which were eventually uncovered at the weekend.

It did not name the trader but his name quickly surfaced and was confirmed by sources at France's second largest bank.

Kerviel's family leapt to his defense.

"He is a decent boy and... is not in my view responsible for what he is accused of. He is being made to carry the blame, and he is not the guilty one. I am convinced of that," said one family member who declined to be named.

A lawyer acting for Kerviel said he was available to talk to police, unlike trader Nick Leeson who went on the run after breaking British bank Barings with similar market bets in 1995.

Former workmates said he was an ordinary, hardworking guy.

"He was an average kind of person. When I arrived in the morning, he was there, and when I left in the evening, he was still there," said one colleague who worked in the same section.

Colleagues said Kerviel tended to get sick at work a lot, which in retrospect they saw as symptomatic of his stress.

GOVERNMENT ANGER

While the media's focus remained on Kerviel, his bosses came under mounting pressure to give a fuller account of how just one junior employee allegedly duped them and ran up huge losses.

President Nicolas Sarkozy bemoaned a "large-scale" fraud.