The broker, named by prosecutors as Mr Moussa Bakir of Paris brokerage Newedge, was brought before investigating judges after being questioned for 48 hours in police custody.

Prosecutors accused him of lending a hand as Kerviel placed a secret wrong-way bet on the share market which the bank blames for a US$7 billion (S$9.9 billion) trading loss, marking the world's biggest rogue trading scandal.

The bank's lawyer said the two were friends.

Investigating judges threw out the accusation of 'conspiracy to commit a breach of trust', allowing

Mr Bakir to walk free from the Paris financial court as an ordinary witness rather than a suspect, and unnoticed by a crowd of journalists.

Prosecutors will not appeal against the decision by judges Renaud Van Ruymbeke and Francois Desset to let Mr Bakir go, a spokesman for the prosecutors' office said.

Their decision - made in less than a quarter of an hour - represents a second setback for prosecutors since the announcement of 4.9 billion euros (S$10.2 billion) of rogue trading losses at SG that sent tremors through the financial world on Jan 24.

The same judges dismissed the central accusation of attempted fraud against 31-year-old Kerviel, though their decision to free him on bail was overturned last Friday.

Kerviel spent the night in a Paris prison.

His lawyer says she will appeal to France's highest court today to have him freed.

The trading scandal has forced SG to announce a 5.5 billion-euro rights issue to repair its balance sheet.

The issue is expected to be launched this week.

REUTERS