A Collaboration with the University of Pittsburgh

France authorities detain second banker in massive fraud case

[JURIST] A second employee of French bank Societe Generale [corporate website] has been detained in connection with the investigation into fraudulent activity allegedly committed by rogue trader Jerome Kerviel [BBC profile], the bank said Tuesday. A Societe Generale spokesperson did not name the man but did confirm that he is not the same banker questioned in late February [JURIST report]. Bloomberg reported that an official involved in the investigation had identified the second banker as Manuel Zabraniecki.

Kerviel has been in custody [JURIST report] since February 8 when the Paris appeals court granted a request by prosecutors to hold Kerviel in "provisional detention" to prevent him from fleeing the country or communicating with any possible accomplices during the investigation. Societe Generale, which lost $7 billion when it was forced to unload the fraudulent positions, described the methods Kerviel supposedly used to commit the fraud in an explanatory note [PDF text]. Kerviel has maintained that he acted alone, but also says that he is being made a scapegoat [Telegraph report] by the bank, which he alleges was aware of his activities. Additionally, BusinessWeek has reported [text] that the Eurex derivatives exchange [exchange website] warned Societe Generale in November 2007 about Kerviel's unauthorized transactions. Bloomberg has more. BBC News has additional coverage.

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.