Another arrest at Societe Generale
Police arrested another employee of French bank Societe Generale on Wednesday as they investigated the world’s biggest rogue trading scandal.
The arrest came as a U.S.-based law firm said it had filed a class-action lawsuit against SocGen, alleging the French bank misled investors about its exposure in the sub-prime mortgage markets and failed to act on information about trades by Jerome Kerviel.
In January, SocGen unveiled 4.9 billion euros ($7.53 billion) of losses which it blamed on rogue deals carried out by Kerviel, 31, a junior trader at the bank.
The latest person arrested in the trading scandal was working for a subsidiary of SocGen, the Paris prosecutor’s office said.
A source close to the matter said the person being held works for SG Securities, the bank’s brokerage arm.
SocGen declined to identify the person or the division.
A spokeswoman for the bank said police had searched SocGen’s trading room at its glass-fronted headquarters in Paris’ La Defense financial district Wednesday.
She confirmed one person was being held for questioning.
Europe 1 radio said the person arrested Wednesday was one of Kerviel’s friends listed on the Facebook social networking website.
The investigation has focused on whether Kerviel had any accomplices.
SocGen published an internal report Feb. 20, which supported its view that Kerviel acted alone although it also highlighted flaws in SocGen’s risk controls.
The fresh arrest comes ahead of a hearing Friday on whether Kerviel should remain in custody.
Kerviel has been placed under investigation for breach of trust, computer abuse and falsification.
He is being held in a Paris prison after a decision to grant bail was overturned.
Last month a Paris broker was questioned for 48 hours over his links to Kerviel, but police accusations against him were dismissed by an investigating judge and he was released.
SocGen’s trading losses shook France’s political and financial establishment when the bank disclosed them Jan. 24.
Government leaders were furious they had not been warned in advance.
U.S. law firm Cohen Milstein Hausfeld & Toll said Wednesday that its complaint, filed in New York federal court, alleged that SocGen made false and misleading statements and concealed material adverse information regarding the bank’s exposure to sub-prime loans, collateralized debt obligations and internal controls.
