BC-EU--France-Trader on Trial, 1st Ld-Writethru,0419
French bank trader: Kerviel bets were out of line
AP Photo XJB104, XJB103, XJB102, XJB101
PARIS (AP) -- A fellow trader of Jerome Kerviel, who is accused of costing French bank Societe Generale billions, told a court Thursday that his colleague's "stratospheric" positions were out of line with a trader's objectives and had endangered the company.
Kerviel, a former futures trader accused of one of the biggest trading frauds in history, has been testifying in a Paris court this week that his over-the-top positions were tolerated by the bank.
Societe Generale has tried to refute that claim. On Wednesday, Jean-Pierre Mustier, the bank's former head of corporate and investment banking, said, "Mr. Kerviel is lying, like he lied to me all the time."
Trader Salim Nemouchi, visibly nervous, said Thursday he was "rather disappointed" by Kerviel because a trader's objectives were "to gain a little money for the bank." Instead, Kerviel "put the bank and its collaborators in danger."
Kerviel bet up to euro50 billion ($73 billion at the time), costing the bank nearly euro5 billion once Societe Generale unwound his positions in January 2008.
It remains the largest-ever alleged fraud by a single trader, though it has since been dwarfed by other crises in the financial world, from the fall of Lehman Brothers to Bernard L. Madoff's multibillion-dollar Ponzi scheme.
Kerviel's defense attorneys, using a projector, showed the court documents seized by investigators from the defendant's computer system that indicate that some of the limits imposed on the trader were deactivated. Bank officials denied that the limits were deactivated.
Nemouchi acknowledged that exceptional gains should trigger an internal investigation, though that was not the case when Kerviel amassed euro1.4 billion in late 2007.
An official representing Societe Generale SA, Claire Dumas, said bank projections showed the bank could have lost up to euro29 billion with Kerviel's trading practices.
She said computer tools at the disposal of traders do not detect colossally high positions. But the tools do allow a trader to see each morning "the results of the day before and the level of his official limits."
"A trader is responsible for his acts. He is aware of his limits ... he is informed of them," Dumas said.
The accused rogue trader faces a possible five years in prison as well as a euro375,000 ($450,000) fine if convicted of forgery, breach of trust and unauthorized computer use.
The bank, a plaintiff in the case, is asking for nearly euro5 billion in damages, though Kerviel could never pay that amount.
