The Fraud and factors against him :
- The fraud consisted of the taking by the trader of unauthorized directional positions on equities or futures traded on regulated markets, which he concealed by a series of fictitious transactions having no other aim . These transactions for the purchase or sale of equities or warrants with deferred start dates, futures transactions with a pending counterparty, or forwards with an internal Group counterparty, were used according to 3 categories of concealment techniques:
- Entry and subsequent cancellation prior to market transaction control measures, concealing the positions’ market risks and latent earnings;
- Entry of pairs of fictitious reverse trades concerning equal quantities of the same underlying asset for different off-market prices, hiding earnings generated following the unwinding of positions;
Booking of intra-monthly provisions that temporarily cancel the latent or realized earnings
The Bank’s General Inspection department, on the one hand, and of PwC, on the other hand, also show that the fraud was facilitated or its detection delayed by weaknesses in the supervision of the trader and in the controls over market activities.
SocGen called him a rogue trader who’d acted without his superiors’ knowledge. Kerviel confessed to a few of the accusations but claimed that his bosses had known about and had tolerated his activities. He just couldn’t prove it…. until now.
On Friday, he struck back. His new lawyer, David Koubbi, announced at a press conference that they had filed a complaint against Société Générale,