Rogue trader Kerviel freed

Trader blamed by Société Générale for its record €4.9bn trading loss was released today pending further investigation

Jérôme Kerviel, the trader accused by his bank, Société Générale, of being responsible for its record €4.9bn (£3.7bn) trading loss, was released from prison today pending further investigation.

The trader still faces accusations of breach of trust, illegally hacking into the bank's computers, and falsifying documents.

Kerviel will be placed under "judicial control", which means he must give up his passport, report to police once a week and have no contact with other protagonists in the SocGen affair. He is also banned from going near trading floors.

"We were waiting for this, we were hoping for it, there was no justification for his continued detention, and the court listened and understood that," the trader's lawyer, Elisabeth Meyer, told reporters. She claims he acted with no accomplices inside or outside the bank. Kerviel had been in custody since February 8.

Last week, prosecutors requested Kerviel's continued detention to prevent him from fleeing, interfering with evidence or contacting possible accomplices. SocGen's lawyer, Jean Veil, said today he was satisfied with the conditions surrounding the trader's release. "Société Générale is a victim, I don't think the victims are there to cry vengeance, but to obtain reparation for the damage suffered," he said.

Kerviel was initially freed in January by the investigating magistrates, Renaud Van Ruymbeke and Françoise Desset, but after an appeal from prosecutors, that decision was overturned and the trader was sent back to prison.

Last Wednesday, Manuel Zabraniecki, a colleague of Kerviel, was detained for questioning and released the same day without charge.

Kerviel claims his bosses knew about his activities but turned a blind eye as long as he remained profitable. The investigators have been focusing on his managers' response to the positions taken by the trader on futures contracts, which went well above the authorised limit of €125m.

Earlier this month, Eric Cordelle, his manager on the Delta One desk, told the judges while being questioned in Kerviel's presence that he had noticed nothing untoward in the trader's startling results for 2007: a gain of €55m.

According to Le Monde, which said it had seen a transcript of the interview, the manager said it was common for one member of the team to be responsible for half of the total earnings. "I asked Jérôme 50 times about it," he is quoted as saying, "and each time his replies convinced me." Kerviel reportedly told investigators his replies were "evasive".

Throughout last year it is claimed the desk received several warnings that trading was taking place well above the permitted limits. In November the bank received a letter from the European derivatives exchange, Eurex, questioning various transactions the previous month with a combined value of more than €1bn. Le Monde quoted Cordelle as saying he had noticed nothing suspicious: "I receive 200 or 300 emails a day... it didn't seem abnormal that the volumes had risen." The manager admitted that, had he seen the detail of the figures quoted by Eurex, he would have "hit the roof".

Last month an internal investigation concluded that the bank's controls were not thorough enough, and staff had failed to make checks that could have uncovered the rogue trades.

Contributor

Alasdair Sandford in Paris

The GuardianTramp

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