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SocGen trader Kerviel gets out of jail

PARIS (Reuters) - Jerome Kerviel, the Frenchman blamed by his company for the world’s biggest rogue trading scandal, left jail on Tuesday after winning a legal battle against detention.

Kerviel, 31, walked free from the Sante prison in Paris after five weeks in custody while investigators continue to probe heavy losses at French bank Societe Generale.

Under the terms of his conditional release, there are strict limits on his movements and contacts.

SocGen unveiled 4.9 billion euros ($7.64 billion) of trading losses on January 24 and blamed them on unauthorized stock market deals carried out by Kerviel, a junior trader at the bank.

Looking relaxed in a dark suit and open-necked pink shirt, the former trader stepped into a Paris side street accompanied by his lawyer Elisabeth Meyer.

Kerviel did not speak to reporters but paused and smiled briefly for cameras and was driven off in a small black car.

“He’s going to take a rest,” Meyer told reporters.

Kerviel is under formal investigation for breach of trust, computer abuse and falsification.

He has acknowledged trading without approval but has told police his supervisors must have known of his activities.

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Judges placed him under formal investigation shortly after the scandal broke but allowed him to remain free under judicial supervision, a system which resembles bail.

Prosecutors appealed and he was sent to the Sante, a prison often used for high-profile detainees, on February 8.

That decision was reversed on Tuesday and prosecutors said that this time they would not appeal.

Under the terms of his conditional release, there are strict limits on his movements and contacts.

“Jerome is very happy, I don’t think he expected it,” Meyer said after visiting him in prison following the court session and before he was actually freed.

Kerviel’s dizzying stock market bets totaling 50 billion euros under the noses of SocGen have spawned a handful of hastily written books about the photogenic former trader.

For some, Kerviel’s trades symbolized the folly of modern markets, whose recent collapse exposed his risky trades.

Among others, particularly in Internet chatrooms, Kerviel has been lauded as an anti-establishment folk hero.

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RESTRICTIONS

Kerviel is barred from entering a trading room or an exchange, may not engage in any activities related to financial markets, and has to present himself weekly at a police station.

He cannot leave the Ile-de-France central French region that includes Paris without permission and must surrender his passport and identity card. He has to inform the investigating magistrates each month where he is staying.

He cannot meet witnesses or other parties in the case.

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Societe Generale’s lawyer, Jean Veil, said he was pleased with the strict controls under which Kerviel was placed.

“The Societe Generale is a victim, and I believe victims should not cry out for vengeance but to obtain reparation of the damages,” Veil said.

An internal SocGen report said Kerviel had acted alone but said the bank’s control systems were not up to preventing fraud.

However satirical weekly Le Canard Enchaine reported on Tuesday that judges had been told by one of Kerviel’s former managers that rogue trades could have been spotted if the bank’s control systems had been applied properly.

One of the warnings from derivatives exchange Eurex about Kerviel was not read by the person at SocGen to whom it was addressed by email, the newspaper said, quoting from testimony.

Weakened by the losses, SocGen is seen as a takeover target with arch rival BNP Paribas trying to drum up political support for a takeover bid.

In 1999, BNP narrowly failed to buy its smaller rival.

SocGen was already facing losses from the subprime mortgage crisis in the United States that has claimed some big-name victims, most recently Bear Stearns.

Bank of France Governor Christian Noyer criticized SocGen’s risk-control systems and French President Nicolas Sarkozy has made clear he thinks SocGen Chairman Daniel Bouton should quit.

Although he offered to resign when the losses first emerged, Bouton has said he has a mandate from the board to keep his job and continue with the bank’s strategy to remain independent.

Writing by Tim Hepher, Marcel Michelson, Editing by Quentin Bryar and Keith Weir

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