Assistant of 'rogue trader' probed

Colleague of Jerome Kerviel investigated for 'complicity' in financial scandal.

    Kerviel says his managers knew of his dealings [AFP] 

    Judges accuse him of "knowingly helping Jerome Kerviel to record fictitious operations" at the bank, in 2007 and January 2008.

    Frederique Baulieu, Mougard's lawyer, said that the investigation was "unfounded" and without justification.

    Profits slump

    The investigation came as the bank reported on Tuesday that it had suffered a 63 per cent slump in second-quarter profits.

    Blaming the global financial credit crisis for the latest setback, the bank reported a net profit of $1bn in the second quarter, compared to $2.7bn 12 months ago.

    The bank said that it had made an asset writedown of $890m for its exposure to subprime risks on the US home mortgage market.

    However, the results were better than analysts had expected and the price of its shares showed a gain of 2.84 per cent to $95 in early trading.

    Analysts had forecast overall a quarterly profit figure of about $987m, although this was an average for a wide range of estimates.

    Shock announcement

    Societe Generale, one of France's three largest banks, shocked the financial world when it announced the losses attributed to Kerviel's dealings in January.

    The losses were incurred as the bank was forced to unwind more than $77bn of unauthorised deals Kerviel is said to have made.

    An internal Societe Generale report made public in May said it found "signs of internal complicity" by Kerviel's assistant.

    He has been questioned several times in connection with the losses as an "assisted witness", a legal status half way between a simple witness and being charged.

    Kerviel turned himself in to police on January 26, two days after the bank revealed the losses, and on January 28 was charged with breach of trust, fabricating documents and illegally accessing computers.

    The trader, who is on bail pending trial, has insisted his managers knew of his dealings but kept silent as long as he was making good returns.

    Early last month, France's banking regulator fined Societe Generale $6.18m for "grave deficiencies" in its internal controls that allowed the situation to go undetected for so long.

    The banking commission said it had also issued a formal warning to the bank for failing to prevent the losses.

    SOURCE: Agencies


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