PARIS - Societe Generale said yesterday that a trader who evaded all its controls to bet $73.5 billion - more than the French bank's market worth - on European markets hacked computers and "combined several fraudulent methods" to cover his tracks, causing billions in losses.
The bank says trader Jerome Kerviel did not appear to have profited personally and seemingly worked alone.
Kerviel's lawyer said the accusations are being used to hide bad investments by the bank related to US subprime mortgages.
"He didn't steal anything, take anything, he didn't take any profit for himself," said the lawyer, Christian Charriere-Bournazel. "The suspicion on Kerviel allows the considerable losses that the bank made on subprimes to be hidden."
Officials said Kerviel was cooperating with police, who held him for a second day of questioning yesterday, seeking answers to what, if confirmed, would be the biggest-ever trading fraud by a single person. Kerviel, 31, has not been seen in public since the bank's bombshell revelation Thursday that his unauthorized trades led to $7.1 billion in losses.
The bank said Kerviel used its money to build massive positions in futures contracts tied to the performance of baskets of stocks traded in Europe. Since those bets greatly exceeded the amount he was allowed to put at risk, Kerviel entered fictitious and offsetting trades in Societe Generale's computers that appeared to minimize the odds of big losses, the bank said. Societe Generale took three days last week to sell or offset with hedges his contracts, which amounted to bets on whether market indexes would rise or fall.
Some observers have said the crisis could leave the bank vulnerable to a takeover. An aide to French President Nicolas Sarkozy suggested the state could step in to prevent any hostile bids.