The US Securities and Exchange Commission is looking at whether Société Générale violated US securities laws as it unwound and revealed its €4.9bn loss from Jérôme Kerviel’s allegedly rogue derivatives trades, the Financial Times has learnt.
The inquiry is at an early stage and the Washington agency might end up concluding that the issues involved are best handled by French authorities because the problems are only tangentially related to the US, people familiar with the matter said.
News of the probe is another blow to SocGen’s capital-raising plans. The bank’s board met last night to decide the timing and terms of its emergency €5.5bn capital increase, which could be launched as early as tomorrow. It is understood that when the capital increase is complete, Daniel Bouton, chairman, could decide to step down, according to people close to the situation. “The subject is no longer taboo,” one said.
Mr Bouton last week survived fierce criticism to win the unanimous support of his board to take the bank through the crisis. But he has since come under further pressure from Nicolas Sarkozy, French president, in private and could decide to leave once the bank is on an even financial keel.
The main obstacle is likely to be finding a replacement and, if no one suitable is found, his departure could be delayed until the annual meeting in the spring.
The French public remains fascinated by the story of how a single trader was allegedly able to build up unauthorised futures positions of some €50bn at SocGen undetected over two years.
On Wednesday, a former inspector of trading operations at SocGen, who left the bank more than a year before Mr Kerviel is alleged to have begun his unauthorised trading, gave a highly critical assessment of resources allocated to his team.
Maxime Le Grand told AFP: “Since inspectors do not have enough power in the bank, we are not given the time we need, or the means to check things out.” SocGen strongly denied the allegations.
It emerged last night that Mr Bouton had testified before magistrates investigating the scandal after judges questioned Mr Kerviel on Monday. The scandal is the subject of at least five investigations in France and the SEC and the US attorney in Brooklyn are also looking at whether insider information spurred stock sales just ahead of SocGen’s announcement on January 24.
By Peggy Hollinger and Martin Arnold in Paris and Brooke Masters in London
© Graham Bishop
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