French rogue trader goes into hiding
Updated on 25 January 2008
The hunt is on for a rogue trader who caused the second biggest bank in France to lose £3.7 billion in one of the biggest banking frauds in history.
Frenchman Jerome Kerviel, 31, has yet to be formally sacked by Société Générale for what the company says was an elaborate deception by an "irrational" trader.
It is understood that the Paris-based banker has gone into hiding after confessing to the fraud over the weekend.
A lawyer claiming to represent Kerviel said he is not on the run and is ready to co-operate with investigators.
The bank said he managed to rack up the huge losses after gambling on the direction of stock markets in a series of secret transactions.
The fraud dwarfs the losses involved in the infamous "rogue trader" case in 1995, which saw Nick Leeson cause the collapse of Barings bank after costing the group £800 million.
Société Générale described its losses as "colossal" but said the fraud would not break the bank.
The situation appears to have been exaggerated by the extreme volatility seen in financial markets in recent weeks.
Some market experts have also suggested the bank's efforts to unravel the trades could have contributed to the unusual turbulence seen this week.
The group discovered late last week that unauthorised and hidden trading positions had been set up last year and early this year.
It said the trader had since confessed to the "exceptional fraud" and was in the process of being dismissed, along with four or five managers.
Chairman and chief executive Daniel Bouton, whose offer of resignation after the fraud emerged was rejected by the group, later said he believed the trader was acting alone.
He said: "I don't know the person and his motives are totally irrational.
"It doesn't seem that he was able to benefit from these colossal trades and directly he did not, that is for sure, although investigations will have to be carried out."
The group confirmed that four or five of the trader's managers had resigned after the discovery at the weekend.
Mr Bouton added: "This is just bad luck, it's Murphy's Law. We discovered it at the same time as the markets plummeted.
"US markets went up and we were really unlucky, but we had to settle these positions as fast as we could and we did so during the three-day market crisis."
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