French Trader Accused of Tweaking Bank Computers Societe Generale officials say a 31-year-old trader blamed for more than $7 billion in losses tampered with the French bank's computer security systems to make secret trades. But lawyers for Jerome Kerviel say he's a scapegoat who did nothing wrong.
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French Trader Accused of Tweaking Bank Computers

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French Trader Accused of Tweaking Bank Computers

French Trader Accused of Tweaking Bank Computers

French Trader Accused of Tweaking Bank Computers

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Societe Generale officials say a 31-year-old trader blamed for more than $7 billion in losses tampered with the French bank's computer security systems to make secret trades. But lawyers for Jerome Kerviel say he's a scapegoat who did nothing wrong.

STEVE INSKEEP, Host:

Apparently the young employee manipulated the computer systems, as Eleanor Beardsley reports.

ELEANOR BEARDSLEY: Some analysts suspect Societe Generale's massive sell-off last week, as it tried to close out of some $70 billion of fraudulent positions, may have actually contributed to the worldwide market slide, a stock plummet that pushed the Federal Reserve to lower U.S. interest rates.

U: (Speaking French)

BEARDSLEY: This morning in a radio interview, Societe Generale's CEO Daniel Bouton insisted that Kerviel worked alone.

M: (Through translator) We have the computer traces of all his operations. We looked at everyone working in his sector. Operations comparable to his were also verified. The security system of the bank was broken by this man, and it is not feasible that anyone else was involved.

BEARDSLEY: But trader John Malbaux(ph), who works at Paris-based investment bank Global Equity, is skeptical. He says even a computer genius could not perpetrate such massive fraud alone.

M: Normally it's not possible you can hide 50 billion euro of position without anybody knowing about such a position. I'm very doubtful and I'm like a lot of guys here, a lot of analysts, about the guy taking the position alone.

BEARDSLEY: Sammy Kabage(ph) is a former French derivatives trader who wrote a book titled "The Art of Trading." He believes that it is exactly the French trading house model that may have allowed Kerviel to get away with it alone.

M: (Through translator) There is an unbalanced hierarchy between the back and front offices in France that doesn't exist in Anglo-Saxon trading houses. The front office has too much power here and the back office not enough. There are times when the back office doesn't even have access to all the information. And the employees in the back offices aren't traders by profession, and this is a problem.

BEARDSLEY: For NPR News, I'm Eleanor Beardsley in Paris.

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