FRENCH BANK 'HAD TRADER WARNING'!

French stock market officials warned Societe Generale about alleged rogue trader Jerome Kerviel late last year, a Paris prosecutor has said. With Mr Kerviel now released on bail, the prosecutor's comments increase the pressure on the bank to explain why his trades were not discovered earlier. Mr Kerviel is being investigated for breach of trust, falsifying documents and breaching computer security.

Societe Generale says his actions cost it 4.9bn euros ($7bn; £3.7bn). The bank, which says it only discovered Mr Kerviel's unauthorised trades 10 days ago, had been pressing for Mr Kerviel to face the more serious charge of fraud. His lawyer, Elisabeth Meyer, on Monday called the judges' decision not to press for fraud charges a "great victory".

Mr Kerviel's other lawyer, Christian Charriere-Bournazel, said his client had committed no fraud, adding that Societe General's chief executive Daniel Bouton had no evidence to back up his allegations. "The word fraud was used by Mr Bouton numerous times," he said. "Mr Bouton held this unfortunate man up for public vilification, threw him to the dogs... and there was no substance to it."

Societe Generale says Mr Kerviel had a position, or a bet, worth about 50bn euros on the future direction of European shares.

SOCIETE GENERALE IN FIGURES
Founded in 1864
467bn euros in assets under management (as of June 2007)
22.5 million customers worldwide
120,000 employees in 77 countries

That was more than the bank's value - about 35bn euros - and about the size of France's entire annual budget deficit. To avoid that potentially catastrophic loss the bank had to unwind Mr Kerviel's trades, but that still cost it 4.9bn euros. Societe Generale said Mr Kerviel's background in handling the administration of trades enabled him to fool those monitoring traders' activities.

It says Mr Kerviel invented deals that, on paper, balanced out his bets. Under French law breach of trust carries a maximum sentence of three years in prison and a fine of 370,000 euros ($546,637; £186,562). While a formal investigation has started into Mr Kerviel's actions, this does not automatically guarantee that a trial will follow.

French President Nicolas Sarkozy has said that Societe Generale's senior managers would have to accept their share of responsibility for the scandal. "When there is an event of this nature, it cannot remain without consequences as far as responsibilities [of senior managers] are concerned," he said.
BBC NEWS REPORT.