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Rogue trader faces legal battle Rogue trader faces legal battle
(30 minutes later)
Societe Generale has filed a legal complaint against the trader accused of defrauding the bank which led to a loss of 4.9bn euros ($7.1bn; £3.7bn).Societe Generale has filed a legal complaint against the trader accused of defrauding the bank which led to a loss of 4.9bn euros ($7.1bn; £3.7bn).
While Societe Generale has yet to name the trader, media reports say he is 31-year-old Frenchman Jerome Kerviel.While Societe Generale has yet to name the trader, media reports say he is 31-year-old Frenchman Jerome Kerviel.
SocGen's chairman Daniel Bouton called the fraud a "one-off" and denied it was a trading or risk-management fault.SocGen's chairman Daniel Bouton called the fraud a "one-off" and denied it was a trading or risk-management fault.
But analysts say Mr Bouton's future looks uncertain after the bank's failure to detect the malpractice.But analysts say Mr Bouton's future looks uncertain after the bank's failure to detect the malpractice.
They also say that the losses have left the bank vulnerable to a takeover bid.They also say that the losses have left the bank vulnerable to a takeover bid.
'Apologies and regrets'
Newspapers published on Friday Mr Bouton's full-page advertisements, where he asked the bank's shareholders to accept his "apologies and deep regrets".
"I understand your disappointment, your anger. This situation is perfectly unacceptable," he wrote.
"I am aware of what the drop in the share price means for you," added the bank's chief executive.
Societe Generale's shares, which ended the previous trading session down 4.1%, were up 2.7% in early trade on Friday.
'Fuelled the nerves'
Some analysts suggest that the rogue trader's actions might have contributed to the stock market turmoil earlier this week.
"Something like this can aggravate the situation, but there has to be underlying concern in the first place," said Howard Archer, economist at Global Insight.
"Any market that is nervous for a number of reasons is going to betouchy. And anything that adds fuel to the nerves isn't going to help," said Anthony Scott, a stockbroker at Charles Stanley.
French President Nicolas Sarkozy called the events at Societe Generale a "large scale internal fraud", but added that the losses "do not affect the solidity and reliability of the French system".
'Simple transactions'
The bank said the fraud was based on simple transactions, but concealed by "sophisticated and varied techniques".
The trader responsible for the fraud had "in-depth knowledge of the control procedures resulting from this former employment in the middle-office", the bank said.
According to reports, Mr Kerviel worked at the bank's Delta One products team in Paris.
He was responsible for betting on the markets' future performance, bank executives said.
Societe Generale said the trader had taken what it called "massive fraudulent directional positions in 2007 and 2008 beyond his limited authority".
Executives said the trader may not have sought personal gain from the fraudulent deals.
Scale of the fraud
I never for one moment believed it would get to this degree of magnitude, this degree of loss Nick Leeson What it's like to lose millionsWhat is City trading like? Nick Leeson interview The losses are four times greater than those made by Nick Leeson, the rogue trader who brought down Barings Bank.
Leeson was sentenced to six-and-a-half years in jail.
Speaking to the BBC, Leeson said he was not shocked that the latest fraud had taken place - only its scale.
"I never for one moment believed it would get to this degree of magnitude, this degree of loss," he said.
The bank, one of France's largest, will need to seek 5.5bn euros in new capital to offset the losses.
But it said it would still make a profit of 600m to 800m euros for 2007, despite the blow to its balance sheet.