French Financial Market Regulator Probes Rogue Trader

The trader accused of causing about $7 billion in losses at Societe Generale told investigators that he believes his bosses were aware of his massive risk-taking on markets but turned a blind eye as long as he earned money, a judicial official said Tuesday.

Jerome Kerviel told investigators: "I can't believe that my superiors were not aware of the amounts that I was committing, it is impossible to generate such profits with small positions," according to excerpts of his testimony published in Le Monde newspaper. Kerviel's remarks were confirmed by Isabelle Montagne, a spokeswoman for the Paris prosecutor's office.

A lawyer for the bank accused Kerviel of lying. Societe Generale said last week that Kerviel's actions cost the bank nearly 5 billion euros ($7 billion) as it unwound his trades.

"When you are questioned by police or judges, you have the right to lie," lawyer Jean Veil told RTL radio. He said the bank was "a victim of someone who lied, who cheated."

Kerviel told investigators of efforts to mask his massive transactions, but he said the bank must nonetheless have noticed something suspicious.

"The techniques I used were not at all sophisticated, and any correctly conducted check should be able to detect these operations," he said, according to the testimony in Le Monde that the prosecution official confirmed.

Kerviel also insisted that his No. 1 concern was "earning money for my bank."

"As long as I was earning cash, the signs were not that worrisome," he said. "As long as you earn money and it isn't too obvious, and it's convenient, nobody says anything."

According to the testimony, the futures trader also told investigators that his pattern of hidden trades started in 2005 with a bet that turned profitable when markets fell because of terrorist attacks in London.

"It makes you want to continue, there's a snowball effect," he was quoted as saying.