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Kerviel turned himself in to police on Saturday and the prosecutor's office said it would ask a court that the trader be remanded in custody during the probe. -- PHOTO: SOCGEN
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PARIS - ACCUSED rogue trader Jerome Kerviel has admitted to concealing deals that led to billions of dollars in losses, a prosecutor said on Monday as Societe Generale's shares took a new stock market hammering.
The 31-year-old junior dealer wanted to appear like an 'exceptional trader' to earn a higher bonus trader but did 'not try to profit directly and personnally' from the financial deals, said prosecutor Jean-Claude Marin.
Kerviel was taken before a Paris investigating judge who was expected to formally charge him over the 4.9 billion euro (S$10.2 billion) loss - the biggest fraud case in investment banking history.
He could face a seven year jail term and a 750,000 euro fine if found guilty of fraud.
Kerviel admitted during two days of questioning that he sought to conceal transactions in a bid to score a major coup on the market and boost his reputation, the prosecutor.
He 'wanted to be seen as an exceptional trader and win higher bonuses' of up to 300,000 euros in 2007, said Mr Marin.
The prosecutor revealed that Kerviel started his high-risk trading in share futures in late 2005. The bank had earlier said the losses started last year.
Societe Generale shares plunged more than seven per cent to 68.70 euros amid renewed doubts about its future with two brokerage studies saying it could become a takeover target.
Bank chairman Daniel Bouton went to London in a bid to shore up investor support for a proposed 5.5 billion euro capital increase to cover the trading losses and two billion euros of losses in the US sub-prime market.
Kerviel turned himself in to police on Saturday and the prosecutor's office said it would ask a court that the trader be remanded in custody during the probe.
Investigators are looking into a complaint by Societe Generale against Kerviel of falsifying documents, use of falsified documents and unauthorised computer access.
The trader's lawyers have accused the bank of turning Kerviel into a scapegoat and trying to 'create a smokescreen' to cover up wider losses from the US subprime mortgage crisis.
Kerviel's lawyers have argued that Societe Generale had brought the losses on itself by hastily selling off his positions last week after discovering Kerviel's trades and hedges on share futures.
Lawyer Christian Charriere-Bournazel earlier said he expected his client to face charges in the investigation.
Kerviel had held positions worth about 50 billion euros (US$73 billions) when he was caught - well in excess of the bank's market value of 35.9 billion euros, according to the bank.
Within days, Societe Generale moved to unwind his deals, limiting losses to 4.9 billion euros.
The bank has maintained that Kerviel acted alone and managed to circumvent layers of risk-management controls by using stolen computer access codes and fictitious documents to hide his operations.
Societe Generale chairman and chief executive Daniel Bouton dismissed 'conspiracy theories' surrounding the case, including one that Kerviel was acting on behalf of a Russian bank fighting a takeover.
'As for people who want to resort to grand theories to say that this a conspiracy from Mars or Jupiter, very well, but do not believe them,' Mr Bouton told Europe 1 radio on Monday.
He has repeatedly denied suggestions that the bank might have put losses from other bad deals into the case, which has stunned international markets already reeling from the US subprime mortgage crisis.
Societe Generale has said it lost two billion euros in subprime deals.
Kerviel joined Societe Generale's investment banking department in 2000 and moved five years later from the back offices to the front office where he began trading in futures.
The trader had bought futures in three European indices - the Eurostoxx, the DAX in Frankfurt and the FTSE in London - effectively betting on the future direction of the stock market.
As questions mounted over how a junior trader could have eluded the top bank's risk management controls, Societe Generale won backing from Finance Minister Christine Lagarde for its handling of the scandal.
'There is no reason to doubt that the bank did everything that it had to do in terms of regulations,' Lagarde said on Monday in an interview to France 2 television.
The case dwarfs that of Nick Leeson, who lost US$1.5 billion as a Singapore-based trader at Barings, causing the collapse of the venerable British bank in 1995. -- AFP
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