Trader accused of $7-billion fraud is caught

January 26, 2008 8:28:50 AM PST
A trader blamed by the French bank Societe General for a massive fraud was taken into custody on Saturday, judicial officials said. Financial police in Paris were to question Jerome Kerviel as part of a probe into Societe Generale's announcement Thursday that the 31-year-old trader was behind a fraud costing the bank $7.14 billion, judicial officials said. They spoke on condition of anonymity because the investigation is ongoing.

Skeptics from Kerviel's neighbors to France's prime minister have questioned whether a single futures trader could have managed such large sums. Adding to the mystery, the bank said Kerviel may not have made any personal gain from his unauthorized trades.

The bank said it discovered the fraud last weekend and unwound the trader's losing bets starting Monday, when world markets tumbled. Some analysts have questioned whether Societe Generale exacerbated the fall and indirectly led to the U.S. Federal Reserve's subsequent decision to cut rates.