French Trader Ordered Jailed

PARIS — A Paris court on Friday ordered that Jérôme Kerviel, the former trader who Société Générale says cost it more than $7 billion last month, be jailed during the course of the ongoing investigation and any eventual trial.

Frédérik-Karel Canoy, a lawyer acting for 100 small shareholders who was present at the hearing, said that when informed of the decision, Mr. Kerviel appeared as if “the sky had fallen on his head.” Mr. Canoy said he had not yet seen a published order from the judges so he could not say what length of time Mr. Kerviel would be detained.

Investigators still need to establish whether Mr. Kerviel acted alone or with others, and whether Mr. Kerviel profited from the activities. Ulrika Weiss, a spokeswoman for the prosecution, argued Thursday that there was a risk that Mr. Kerviel could flee or contact people who could influence the outcome of the investigation if he was not taken into custody, a concern his lawyers have discounted.

The news came as French financial police interrogated a second person in relation to the case, a move that raised questions about the accounts given by both the bank and Mr. Kerviel that Mr. Kerviel had acted alone in setting up billions of euros worth of fictitious trades.

A spokeswoman for the Paris prosecutor’s office, Isabelle Montagne, confirmed that financial police had taken an employee of Fimat, a futures brokerage affiliated with Société Générale, into custody about midday on Thursday and that he was expected to be held for questioning until about midday on Saturday. The man, who was identified by people close to the investigation Moussa Bakir, a 32-year-old broker, was taken into custody about the same time that the police raided Fimat’s offices on the Champs-Elysées in central Paris, taking with them documents and computer files.

A spokeswoman for Société Générale, Joelle Rosello, declined to identify the broker, saying only that he bank was “cooperating closely with the investigation.”

Société Générale last month merged Fimat into Newedge, a joint venture with the futures brokerage unit of Calyon, the investment banking arm of the French bank Crédit Agricole.

According to two people close to the investigation, Société Générale has provided prosecutors with new evidence related to Mr. Kerviel’s fictitious trades, including a series of electronic message exchanges between Mr. Kerviel and Mr. Bakir, the Fimat broker, that were sent using the bank’s internal computer system. One such message, sent by Mr. Bakir to Mr. Kerviel on Nov. 30, read: “You have done nothing illegal in terms of the law,” these people said. One added that this was only a small part of the communications linking the two men.

Fimat first raised red flags at Eurex, the German exchange, in December, when Eurex questioned the bank about the large number of transactions Mr. Kerviel entered through the subsidiary

In a Nov. 7 letter to Société Générale, Eurex asked why he had often entered his transactions through Fimat. Eurex even inquired whether Mr. Kerviel had entered the transactions automatically or manually.

“Please explain the background for this procedure,” two Eurex officials wrote.

Speaking to journalists before entering the hearing room, Jean Veil, a lawyer for Société Générale, declined to say whether he wanted Mr. Kerviel detained or not. But referring to the recent interrogation of the Fimat broker, Mr. Veil suggested there were grounds to believe that Mr. Kerviel may not have been telling the whole truth in his original testimony that he acted alone.

“From the moment that a suspect lies, we should ask what is the best way of proceeding with the investigation,” Mr. Veil said, hinting that detention was probably preferable at this pretrial stage.

A spokeswoman for the prosecution said earlier that if Mr. Kerviel were to be detained, he would spend his time in custody in a jail in or around Paris.

James Kanter contributed reporting.

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