Kerviel fallout continues as SocGen chief is probed

9 April 2008

Chief executive of Societe Generale, Daniel Bouton, has been questioned by lawmakers over apparently lax internal regulations at the French bank.

The probe, from a Paris parliamentary committee, has come about following the spectacular losses suffered by the bank due to the actions of junior derivatives trader Jerome Kerviel.

SocGen declared losses of $7.73 billion earlier this year, due mainly to the employee - who was allowed to make a series of unauthorised trades.

Mr Kerviel, currently facing charges of abuse of confidence, alleges that the loss-making practices are widespread at the bank - and that his actions were known of by superiors.

For his part, the chief executive claimed that controls at SocGen have been tightened significantly in recent months.

In particular, the previous system of imposing limits on individual traders is to be replaced by a "more cross-asset, transversal overview", Reuters reports.

"Fraud has existed in the banking industry since its birth - there have been several fraud cases, and there will be others," Mr Bouton added.

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