SG says rogue trader had fictitious counterparties; lawyers protest innocence

PARIS, Jan 27, 2008 (AFP) – French investigators on Sunday extended the detention of accused rogue trader Jerome Kerviel over a seven-billion-dollar fraud as Societe Generale revealed he had been gambling with more than 73 billion dollars in deals when caught. “What happened at Societe Generale is certainly not a disaster that resulted from our strategy. It is more like an accidental fire which destroys a large factory at an industrial plant,” Bouton said. The 31-year-old turned himself into police on Saturday, two days after Societe Generale said it had lost a staggering 4.9 billion euros (7.15 billion dollars), the biggest in investment banking history.

Prosecutors extended Kerviel’s detention for questioning for another 24 hours, and must decide on Monday whether to release him or place him under formal investigation. He denies any wrongdoing.

Societe Generale has filed a criminal complaint against Kerviel, alleging the use of falsified documents and unauthorised computer access to cover up failed deals on share futures and hedges worth tens of billions of dollars.

But the trader’s lawyers hit back on Sunday, accusing the bank of trying to “create a smokescreen” to cover up wider losses accumulated in the midst of the US subprime mortgage crisi