Trade loss message to SocGen: read the fine print
Mon Feb 11, 2008
PARIS (Reuters) - Scandal-hit Societe Generale shares the plight of people who take out an insurance policy to cover the remotest eventuality only to find it pays out a pittance, the French bank disclosed on Monday.
The bank, which last month announced rogue trading losses of €4.9 billion (£3.5 billion) and blamed a lone junior trader, was insured against fraud but the amount it can receive is negligible.
"There is an insurance in the case of fraud but its amounts are capped and completely marginal compared with the amount of the fraud," finance director Frederic Oudea told analysts.
He was speaking in a conference call on a €5.5 billion rights issue designed to plug a hole in the bank's finances after 31-year-old trader Jerome Kerviel built up unauthorised stock futures bets which had to be sold off at a loss.
SocGen has accused the trader of fraud and said he acted alone to defeat the bank's control systems. Bank of France Christian Noyer called Kerviel a "genius of fraud" when the world's biggest rogue trading scandal erupted on January 24.
However, investigating judges dismissed fraud accusations and placed Kerviel under formal investigation for breach of trust, manipulation of computer records and falsifying documents.
A Paris financial broker was questioned by police last week over his links with Kerviel but freed by judges who dismissed prosecutors' conspiracy accusations against him on Saturday.
