A Paris prosecutor on Monday asked for preliminary charges of forgery, breach of trust and fraud against a low-level trader accused by Societe Generale bank of orchestrating the largest securities fraud ever by single person.
Prosecutor Jean-Claude Marin said Jerome Kerviel, 31, did not attempt to steal money from the bank or its customers, but was motivated by a desire to be "an exceptional trader" and that he sought performance bonuses.
Kerviel appears to have acted alone, Marin said.
"It's always a bit for money, I'm not sure that was his prime motive," said the prosecutor. "It functions a bit like a drug, it's an addiction ... there's a sort of spiral you can't get out of."
Kerviel told investigators, who just wrapped up 48 hours of questioning, that he expected a bonus of 300,000 euros ($441,150) for 2007.
Societe Generale said it lost 4.82 billion euros ($7.09 billion) after unwinding Kerviel's trades.
Kerviel was set to appear before a judge who will decide whether to proceed with preliminary charges.
Under French law, filing preliminary charges means the judge has determined there is strong evidence to suggest involvement in a crime and gives investigators time to ask for a trial.
The bank's offices were searched Friday and "masses of documents" including computer records were seized, Marin said.
CEO Daniel Bouton said Societe Generale, thought by some experts to be vulnerable to a takeover, has not been approached.
Bank shares fell nearly 4 percent to 70.94 euros ($104.32) Monday.
Meanwhile, questions about how the bank handled the fraud are mounting. A lawyer for a group of Societe Generale shareholders, Frederik Canoy, said a legal complaint had been filed Monday asking investigators to look into possible insider trading.
The complaint was filed after France's market watchdog said in a routine disclosure that a member of Societe Generale's board, Robert A. Day, sold 85.75 million euros ($126.1 million) worth of shares in the bank on Jan. 9 — two weeks before the fraud announcement and well before bank management says it knew about the problem. Day is an investment manager with U.S.-based Trust Company of the West, or TCW, who Forbes magazine says has a net worth is $1.6 billion.
Two foundations linked to Day, the Robert A. Day Foundation and the Kelly Day Foundation, also sold a total of 9.59 million euros ($14.1 million) worth of shares a day later, on Jan. 10, the market watchdog reported. Regulators have made no allegations of wrongdoing.
Telephone calls to both Day foundations and TCW were not immediately returned Monday.
Bouton rejected suggestions from Kerviel's lawyers that Societe Generale was using their client to hide big losses linked to the U.S. subprime mortgage crisis.
"How could you want to imagine that we would have been able to hide a hole by another hole? It's completely stupid," Bouton told Europe-1 radio. He called Kerviel a "remarkable concealer" who had managed to outwit the bank's risk control systems by toggling between real and fictitious positions.
"That's what created this gigantic fraud," he said.
Elisabeth Meyer, one of Kerviel's defense lawyers, said he was "bearing up to the shock."
She disputed Societe Generale claims that Kerviel had committed fraud, saying he was in the black with his trades as of Dec. 31.
"In my view, he was thrown to the lions before being able to explain himself," said Meyer. "It's a lynching."
Another lawyer, Christian Charriere-Bournazel, said on Europe-1 radio that Kerviel made a profit of 1.5 billion euros ($2.2 billion) before his bets went sour.
The prosecutor, however, said the trader only "virtually" made a profit for the bank.
Kerviel could face a maximum seven years imprisonment if convicted under the current charges, the prosecutor said.
A day after the bank sent out a five-page explanation of how the fraud unfolded, analysts still had many questions.
Societe Generale alleges that Kerviel used other people's computer access codes, falsified documents and used other methods to cover his tracks — helped by his previous experience in other offices at the bank that monitor traders. It says he bet some 50 billion euros ($73.53 billion) — more that the bank's market worth — on European markets.
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