Kerviel faced earlier inquiry

Trades executed by Jérôme Kerviel, the Société Générale dealer who allegedly masterminded the world’s biggest rogue trading scandal, were being scrutinised within the bank’s broking arm last autumn. The Financial Times has learnt that a senior executive of Fimat, then a wholly owned subsidiary of the French bank, began investigating at the end of September deals executed by Moussa Bakir, an employee, for Mr Kerviel after being alerted to abnormally high volumes on his broking desk. The executive raised questions about commissions paid to Mr Bakir on at least four cash equities trades for Mr Kerviel. But he uncovered nothing conclusive and the inquiry was not prioritised as he prepared for Fimat’s merger with Calyon Financial that created Newedge, as the company is now known. The investigation was still under way when SocGen discovered last month that Mr Kerviel had separately built up unauthorised futures positions totalling €50bn ($73bn), trying to cover his tracks with forged hedges. It is unclear whether the Fimat inquiry into cash equities trading would have led to an alert sooner within SocGen, since the alleged fraud occurred over Mr Kerviel’s futures positions and not his cash equities trading. However, the revelation that there were concerns last autumn that could have led to a wider investigation will be embarrassing for SocGen. The bank has been accused of weaknesses in its control system in a government report prepared by the Banking Commission.

Source: http://www.ft.com/cms/s/0/f52e016a-dd96-11dc-ad7e-0000779fd2ac.html