Court Frees Societe Generale Trader Accused of Billions in Losses

PARIS – A French court Tuesday ordered the release of a Societe Generale trader accused of causing billions of euros (dollars) in losses for the bank through unauthorized trades, a spokesman for the trader said.

Jerome Kerviel was expected to leave Paris' grim La Sante prison later in the day. He has been held there since Feb. 8 pending the investigation. Spokesman Christophe Reille did not elaborate on the order to free Kerviel.

Prosecutors said they wanted to keep him jailed to prevent him from speaking with accomplices — if he had any. Kerviel maintains that he acted alone. His lawyers argued that Kerviel has cooperated with investigators, has shown no signs of wanting to flee France and could in no way hinder the investigation by being released from prison.

"We were expecting this decision, we were hoping for it," said Kerviel's lawyer Elisabeth Meyer. "The court listened to us."

Administrative procedures needed to be handled before Kerviel, 31, could leave the prison in southern Paris.

Once out, "He is going to rest, and we are all going to let him rest," Meyer said. She did not say where he would go.

Societe Generale did not protest the ruling. Societe Generale lawyer Jean Veil called it a "very balanced decision" that will allow a "calm and secure" investigation. He noted the decision came with strict judicial surveillance.

Kerviel has to turn in his identity card and his passport and is forbidden from leaving the Paris region and entering trading floors or stock exchanges, according to a judicial official. The official spoke on condition of anonymity because the investigation is ongoing.

Kerviel is barred from meeting certain people, judicial officials said, without giving names. He has to report to police once a week.

Societe Generale says it discovered the unauthorized trades by Kerviel the weekend of Jan. 19-20 and spent three days unwinding them on shaky world markets. It announced Jan. 24 that it had lost nearly euro5 billion (more than US$7 billion) in the process.

Shares in Societe Generale have fallen in recent months amid the trading losses and worldwide financial troubles, but the company restored some investor confidence with a euro5.5 billion capital hike that wrapped up earlier this month. Shares were up 2.6 percent Tuesday morning to euro64.62 ($101.90) in Paris trading.

Investigating judges filed preliminary charges against Kerviel on Jan. 28 of forgery, breach of trust and unauthorized computer activity.

Although Kerviel has said he acted alone, he also said his bosses at Societe Generale must have been aware of his massive risk-taking, and turned a blind eye as long as he was making money for the bank. Investigators want to determine what Kerviel's colleagues and superiors may or may not have known about his trades.

At least two people who worked with Kerviel have been questioned and released.

A preliminary internal probe by Societe Generale found no evidence that anyone helped Kerviel hide his positions, or that the trader profitted from personal monetary gains. The report said bank officials failed to follow up on 74 warnings about questionable trades, uncovering Kerviel's positions only on the 75th.

The decision on whether to allow Kerviel to go free had been expected Friday but was postponed, implying the court needed more time.

Frederik Canoy, a lawyer for small shareholders of Societe Generale, a third party in the case who also filed a suit, said it is easier for Kerviel to defend himself now that he is being released.

"It was much more difficult when he was locked up to speak with his lawyer. Now that he is out of prison it will accelerate the process," he said.