A rogue trader who cost France's Societe Generale bank more than $7 billion by making bad stock market bets was taken into custody on Saturday for questioning, judicial officials said.
Financial police in Paris were to question Jerome Kerviel as part of a probe into Societe Generale's announcement Thursday that the 31-year-old trader had put tens of billions of dollars at risk in one of history's biggest frauds, judicial officials said. They spoke on condition of anonymity because the investigation is ongoing.
Skeptics from Kerviel's neighbors to France's prime minister have questioned whether a single futures trader could have managed such large sums. Adding to the mystery, the bank said Kerviel may not have made any personal gain from his unauthorized trades.
The bank said it discovered the fraud last weekend and unwound the trader's losing bets starting Monday, when world markets tumbled. Some analysts have questioned whether Societe Generale exacerbated the fall and indirectly led to the U.S. Federal Reserve's subsequent decision to cut rates.
This one individual is accused of putting billions of dollars at risk in fraudulent transactions, and could take down one of France's largest financial houses - Societe Generale. The news spread through markets around the world, and caused serious trepidation and the markets tanked in reaction. News of the investigation may also have caused the US Federal Reserve to drop the federal funds rate by 3/4 of a point - to spur banks to loan to each other and stabilize the situation further. The Fed might have dropped rates by a smaller amount but for the news from Societe Generale.
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