Second trader detained in Paris

The Baltimore Sun

PARIS -- Authorities took a second employee at the French bank Societe Generale into custody yesterday in connection with a trading scandal that the bank said had cost it more than $7 billion.

The Paris financial police searched the bank's trading room in the La Defense business district outside Paris yesterday morning, Isabelle Montagne, a spokeswoman for the prosecutor's office, said. A male broker from the bank's cash equity trading department was taken in for questioning for up to 48 hours, she said.

Melody Jeannin, a Societe Generale spokeswoman, confirmed that the police had taken the employee away for questioning as part of an investigation into the affair, but she declined to comment further.

Neither prosecutors nor the bank spokeswoman would identify the broker. But other bank employees identified him as Manuel Zabraniecki, 29, who joined the equity sales team of Societe Generale in October 2006.

Zabraniecki was one of 11 people originally listed as friends of the accused former trader, Jerome Kerviel, on his personal profile on the Facebook social networking Web site. Kerviel's profile was deactivated in late January, shortly after the Societe Generale scandal broke.

Lawyers for Kerviel, 31, are to seek his release from jail in a hearing before the Paris appeals court tomorrow.

Kerviel was placed in pretrial detention Feb. 8 after prosecutors persuaded judges of the need to block him from fleeing or tampering with evidence and witnesses.

Last month, the authorities questioned Moussa Bakir, a 32-year-old broker at Newedge, a former Societe Generale affiliate previously known as Fimat. Bakir was held for two days by the police and then released without being charged, although he remained as what was described as a person of interest in the case.

Societe Generale disclosed in January that it suffered the losses, equal to more than $7 billion, when it unwound 50 billion euros' worth of unauthorized bets that Kerviel had hidden through a series of fictitious transactions.

People with knowledge of the investigation have said that the police are looking into whether any of several brokers that Kerviel regularly used to conduct his trades may have been aware of his activities or helped him to conceal them from his superiors.

Bakir, the Fimat broker, drew the attention of investigators after electronic messages and telephone records suggested that Kerviel may have confided details of his activities to Bakir.

Bakir primarily worked with Kerviel in trades involving stock index futures. But he also brokered a number of cash equity trades for Kerviel last autumn that generated unusually large commissions.

A spokesman for Newedge confirmed last month that the commissions raised enough suspicions among Fimat managers to prompt an internal investigation in November, but the inquiry ultimately did not yield any evidence of wrongdoing.

As a cash equities broker, Zabraniecki may have been involved in transactions similar to those conducted between Kerviel and Bakir.

Kerviel has never disputed the bank's claim that he was the sole architect of an elaborate ruse involving scores of fake trades. He has said, however, that his supervisors and the bank's compliance officers received several warnings last year that should have prompted them to investigate his activities more closely.

Findings released last month by a panel of independent Societe Generale board members said the bank had failed to follow up on at least 75 internal alerts raised by Kerviel's activities.

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