France police extend custody of rogue bank trader suspected of massive fraud

[JURIST] French authorities on Sunday ordered alleged "rogue trader" Jerome Kerviel [BBC backgrounder] to be held for an additional 24 hours while police investigate the $73 billion worth of unauthorized trades Kerviel made while working for the French bank Societe Generale [bank website]. Since news of the fraud - the largest bank fraud in history - broke on Thursday, police have seized computer disks, documents, and other evidence from Kerviel's home and Societe Generale's offices. Under French law, prosecutors must either place Kerviel under formal investigation or release him from custody when the extension expires on Monday.

The bank, which lost $7 billion when it was forced to unload the fraudulent positions, has filed a criminal complaint against Kerviel, and alleged the methods he used to commit the fraud in a explanatory note [PDF text] released Sunday:

-firstly, he ensured that the characteristics of the fictitious operations limited the chances of a control: for example he chose very specific operations with no cash movements or margin call and which did not require immediate confirmation;

-he misappropriated the IT access codes belonging to operators in order to cancel certain operations;

-he falsified documents allowing him to justify the entry of fictitious operations.

-he ensured that the fictitious operations involved a different financial instrument to the one he had just cancelled, in order to increase his chances of not being controlled.
Kerviel, who turned himself in voluntarily [JURIST report] on Saturday, maintains his innocence and is reported to be cooperating with police. AFP has more. AP has additional coverage


 

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