Video: 'Seven billion dollar man' missing

updated 7/5/2008 5:55:18 AM ET 2008-07-05T09:55:18

France's central bank announced Friday that it has fined Societe Generale $6.3 million for "serious shortcomings" in its internal controls that led to nearly $7.8 billion in trading losses announced earlier this year.

The Bank of France's banking commission also issued a formal warning to SocGen, France's second-biggest bank, saying shortcomings in "hierarchical controls" for extended periods in 2007 fueled the problem.

Societe Generale officials in Paris declined to comment on the decision, made Thursday but announced Friday on the Bank of France Web site.

The commission's ruling noted "significant weaknesses" in Societe Generale's computer security systems and said that traders and those meant to monitor them were not sufficiently independent of each other. It noted, however, the bank's quick efforts to rectify control failures after the losses were discovered.

Societe Generale has accused futures trader Jerome Kerviel of betting tens of billions of the bank's money without permission, which led to massive losses announced in January. Investigating judges have filed preliminary charges against Kerviel for forgery, breach of trust and unauthorized computer use.

Kerviel is free while the investigation continues and is working in a new job as a computer consultant. His lawyer says his supervisors were aware of his trades and did not stop them while he was making money for the bank.

Two reports issued in May showed that Societe Generale managers had ignored repeated warnings about Kerviel's activities, and pointed to a culture of risk-taking at the bank.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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