Shareholders ask what Société Générale managers knew of trader's activity

February 17, 2008 - 0:0

PARIS (IHT) -- A lawyer representing Société Générale shareholders asked judges on Friday to interview an immediate supervisor of Jérôme Kerviel, the trader the bank blames for billions in losses from unauthorized trades - a step intended to determine when Kerviel's superiors were first alerted to his actions.

The move came as Moussa Bakir, a broker for Kerviel, filed a lawsuit Friday alleging that excerpts of leaked instant messaging exchanges between the two men had been manipulated to imply complicity on his part.
Frédérik-Karel Canoy, who represents around 200 small shareholders of the bank, said he asked the judges Renaud Van Ruymbeke and Françoise Desset to arrange a hearing with Martial Rouyère, the head of the Delta One trading desk where Kerviel worked.
Canoy said shareholders were seeking answers to lingering questions about Kerviel's superiors, whom the former trader has said were aware of and even encouraged some of his positions as long as they earned the bank money.
""They put the system in place that enabled Kerviel to do what he did,"" Canoy said of the bank's management. ""They cannot then claim to be victims.""
Rouyère was interrogated last month by the French financial police.
Canoy claimed that at least five of Kerviel's Delta One colleagues had knowledge of his activities, including Rouyère and Eric Cordelle, the deputy head of the Delta One desk. ""Rouyère is the weak link in the chain,"" Canoy asserted Friday. ""If he falls, the rest will fall as well.""
Judges last Friday ordered that Kerviel be placed into custody until his trial begins.
10-page judgment
In a 10-page judgment reviewed by the International Herald Tribune summarizing the facts that have so far been presented in the investigation, Rouyère and Cordelle are identified as Kerviel's immediate superiors.
Others above them were also cited, including Pierre-Yves Morlat, the head of trading, equities and derivatives. The summary also named Philippe Baboulin, the bank's head of equity finance, and Luc François, a co-head of the equities and derivatives department.
A person well acquainted with the trading controls at Société Générale has said that it was ""inconceivable"" that Kerviel's supervisors were not alerted after his trades set off alarm bells last year at an exchange in Frankfurt.
Canoy's shareholder group is seeking compensation from Société Générale for the steep drop in the bank's share price that followed the disclosure of the bank's losses.
Bakir, who was named a person of interest to the investigation last Saturday, filed his case against an unidentified party for falsifying documents and libel after excerpts of the chats between him and Kerviel appeared first in the weekly magazine Le Nouvel Observateur and was carried by several news agencies and newspapers, including the International Herald Tribune, which published them after two people familiar with the investigation had confirmed the contents of the excerpts.
Bakir's lawyer, Jean-David Scémama, said in an interview Friday that while the language in the exchange was accurate, its meaning had been altered when several strategic parts of the dialogue were left out.
In some places, several lines of the exchange were cut between what appeared to be a question and an immediate answer, he said. Other times, expressions or symbols of humor - like a smiley face - were removed to give the dialogue a greater sense of gravity.
Linked transcript
In some instances, Scémama said, phrases that in the original had been written by Kerviel were attributed to Bakir in the leaked transcript, and the time stamps on certain messages were changed on crucial days, like Jan. 18, when Société Générale discovered Kerviel's fraud.
""I believe these modifications were made with a goal in mind, and that goal seems clear: give the impression of complicity of my client with Jérôme Kerviel,"" Scémama said. ""If the transcript was complete as it was leaked, my client should have been named as a suspect.""
He added: ""I can't believe this was a succession of errors because each modification works in the same sense. That's why I have the impression that we face a case of manipulation.""
When asked about Scémama's allegations, Veil, the lawyer for Société Générale, declined to comment.
Bakir was an intern at Société Générale before starting to work at Fimat in early 2006. While he had worked with Kerviel on smaller transactions, he only started to work with him on ""larger flows"" from September 2007.
The leaked transcript contained several exchanges that suggested that Bakir had been aware of at least some of Kerviel's fraudulent trading activities.
Scémama declined to give examples of where the transcript had been truncated. But one person close to the investigation who had seen the original text said that two much-cited and seemingly incriminating phrases came across differently in the context of the complete transcript.