PARIS (Reuters) - A Paris court on Tuesday freed Jerome Kerviel, the trader accused of causing record losses at French bank Societe Generale, pending investigation.
By Sudip Kar-Gupta and Thierry Leveque
PARIS (Reuters) - A Paris court on Tuesday freed Jerome Kerviel, the trader accused of causing record losses at French bank Societe Generale, pending investigation.
SocGen unveiled 4.9 billion euros ($7.64 billion) of losses in January in the biggest trading scandal in history which it said was caused by rogue deals carried out by Kerviel, a junior trader at the bank.
The bank was already facing losses from the subprime mortgage crisis in the United States that has claimed some big-name victims, most recently Bear Stearns.
!ADVERTISEMENT!"I am very happy for Jerome," said Elisabeth Meyer, one of his lawyers. "We expected it, we hoped for it, the conditions to prolong detention were not there, the court has understood and listened to us," Meyer said.
Kerviel is barred from entering a trading room or an exchange, may not engage in any activities related to financial markets, and has to present himself weekly at a police station.
Kerviel cannot leave the Ile-de-France central French region that includes Paris without permission and must surrender his passport and identity card. He has to inform the investigating magistrates each month where he is staying.
He cannot meet witnesses or other parties involved in the case. His lawyer reiterated Kerviel acted alone.
The public prosecution service said it would not appeal against the decision.
Societe Generale's lawyer, Jean Veil, said he was pleased with the strict controls under which Kerviel was placed.
"The Societe Generale is a victim, and I believe victims should not cry out for vengeance but to obtain reparation of the damages," Veil said.
SANTE PRISON
Kerviel, 31, is under formal investigation for breach of trust, computer abuse and falsification and has been held in Paris's La Sante prison since February.
SocGen has carried out an internal investigation into the Kerviel affair. Its report, published on February 20, supported the bank's previously expressed view that Kerviel acted alone.
The report reiterated that Kerviel started building up unauthorized trading positions in 2005 and 2006 for "small amounts," but they got bigger from March 2007 onwards.
By the time SocGen discovered what was going on in late January, Kerviel had amassed a position worth 49 billion euros, which SocGen unwound between January 21 and January 23 in an already falling stock market.
SocGen's losses have made it vulnerable to a takeover bid. France's biggest listed bank, BNP Paribas, has said it is looking at SocGen.
In 1999, BNP narrowly failed to buy its rival.
The bank has also come under pressure from leading politicians and regulators.
Bank of France Governor Christian Noyer criticized SocGen's risk-control systems and French President Nicolas Sarkozy has made clear he thinks SocGen Chairman Daniel Bouton should quit.
Bouton has said he has a mandate from the board to keep his job and continue with the bank's standalone strategy.
On Monday, the bank promoted Chief Financial Officer Frederic Oudea to the post of deputy chief executive.
Oudea now sits above Jean-Pierre Mustier, the head of SocGen's investment banking arm whose reputation suffered from the trading debacle.
SocGen shares were up three percent at 64.85 at 6:17 a.m. EDT in a widespread rebound of banking shares before an expected interest rate cut by the U.S. Federal Reserve.
(Writing by Marcel Michelson, Editing by Quentin Bryar)
