PARIS (Bloomberg) — Jerome Kerviel, accused by Societe Generale SA of unauthorised trading that led to 4.9 billion euros ($7.2 billion) in losses, was charged with attempted fraud by the French financial police yesterday.

Kerviel, 31, admitted to hacking into computers and faking e-mails to hide trades since 2005, Paris prosecutor Jean-Claude Marin said at a press conference yesterday, recommending the charges now be investigated by a judge. Kerviel's shortfall was more than four times the $1.4 billion of losses by Nick Leeson that brought down Barings Plc in 1995.

Societe Generale, France's third-largest bank by market value, said Kerviel amassed 50 billion euros in positions. The losses, the biggest in banking history, resulted from Kerviel's bets on futures linked to European stock indexes that he hedged with phony transactions.

Kerviel's goal "was to be a stand-out trader," Marin said. "He'd taken winning positions for a long time and thought he had the benefit of the doubt."

Marin will ask the judge to focus investigations on four charges, including abuse of trust, which carries a seven-year prison sentence and a fine of 750,000 euros.

Marin said Kerviel told him it wasn't unusual for traders on the desk to exceed limits and that he had acted alone. The prosecutor said Kerviel told him the Eurex derivatives exchange called Societe Generale in November 2007 about the size of the bank's positions. Kerviel was able to explain away the concerns, Marin said.

Kerviel expected a bonus of 300,000 euros for 2007, Marin said. Societe Generale has started proceedings to fire him.

The financial police are seeking a mandate to keep him in custody for his own protection and to prevent him fleeing or tampering with evidence, Marin said, adding that the trader "cooperated fully".

Messages left for comment at the offices of Christian Charriere-Bournazel and Elisabeth Meyer, Kerviel's lawyers, were not immediately returned.

Kerviel had "committed no dishonest act, did not siphon off a single cent, and did not profit in any way," Agence France-Presse cited the lawyers as saying yesterday. Societe Generale was creating a "smokescreen" to hide losses it had made elsewhere, the news agency quoted the lawyers as saying.

"That's laughable," said Societe Generale Chairman Daniel Bouton in an interview on Europe1 radio today. "How can you imagine that we'd hide a hole with another hole? If we had a hole somewhere else, there's no way we could hide it."

The case has raised fresh doubts about risk management at the world's biggest financial institutions and prompted calls for improvement from French President Nicolas Sarkozy.

"It's time to introduce transparency and new rules in the international and French financial systems," Sarkozy said from India on January 26.

Societe Generale fell 4.35 euros, or 5.9 percent, to 69.52 euros at 4.10 p.m. in Paris trading, bringing losses this year to 30 percent. Positions Kerviel amassed were larger than the company's market value, which now stands at 33 billion euros. "There was clearly a fault in the bank's control systems," said Jean Peyrelevade, a former CEO of Credit Lyonnais and a member of the board of Barings when Leeson's losses brought down the bank.

Kerviel worked on the Delta One trading desk, specialising in European stock market index futures. His job was to arbitrage small price differences between contracts, not to take bets on the markets' direction, Jean-Pierre Mustier, chief executive officer of the Paris-based lender's corporate and investment bank, said on a conference call yesterday.

His positions, mostly on Germany's DAX Index and the pan- European Euro Stoxx 50, had losses of 1.4 billion euros when Societe Generale discovered the fraud on January 18. The bank said it lost 3.5 billion euros more liquidating the positions as European markets fell.

He was caught when he exceeded the recently changed counterparty risk limits on a trade, and the counterparty's e-mail confirming the transaction "appeared suspect".

He was questioned on January 19, and after first trying to explain his way out he admitted the fake trades later that day, the bank said. It wasn't until the following afternoon that the extent of his positions was uncovered.