'Rogue trader' had assisstant

Investigators at Societe Generale SA say they suspect former futures trader Jerome Kerviel was helped by an assistant to cover up massive trading positions that led to a multibillion euro loss.

In two long-awaited reports, the investigators said the French bank’s management failures and culture of risk-taking were partly to blame for failing to spot the positions, which led to a loss of almost €5bn once they were unwound.

The reports detail the extent of Kerviel’s alleged fraud in a scandal that broke out in January and has sullied the reputation of the glamorous trading desk at the award-winning bank.

Investigators say Kerviel’s bosses missed more than 1,000 faked trades; a huge jump in his earnings in 2007; questions about his trades from the Eurex exchange; unusually high levels of cash flow, accounting anomalies, and high brokerage expenses; Kerviel’s failure to take vacation; and his breach of the desk’s market risk limit on one position.

“The trader’s hierarchy, constituting the first level of control, proved deficient in the supervision of his activities,” said the board of directors in a seven-page statement to shareholders accompanying the reports.

The reports said Kerviel’s direct superior “lacked trading experience” and showed “an inappropriate degree of tolerance” about his trades.

The bank did not name the superior, who they said they have been unable to question because he no longer works for the company.

The reports also criticised the manager of the company’s Delta One trading desk, who they said was aware of the lack of experience of Kerviel’s manager, and “deficiencies in the monitoring of risks by the desk in general”.

One report was led by a committee of three board directors, the other by audit firm PriceWaterhouseCoopers. They were published ahead of next Tuesday’s annual shareholder meeting.

The 69-report by the directors said that they had “discovered indications of internal collusion involving a trading assistant,” whom they declined to identify.

They said they were unable to speak to the assistant because of an ongoing judicial probe, adding that it will be up to the court to confirm its suspicions.