Schmuck: French trader suspected of losing more than $751.5 million

PARIS: A Paris judge on Thursday filed preliminary charges against a trader suspected of losing more than €600 million in complex derivative trades at French mutual bank Caisse d'Épargne, a judicial official said.

The trader, Boris Picano-Nacci, was placed under judicial supervision by the investigating magistrate Xaviere Simeoni after spending 36 hours being questioned by the financial police, the official said.

The move gives the judge time to investigate before ordering a trial or dropping "breach of trust" charges. The official was speaking on condition of anonymity, in accordance with judicial policy.

Picano-Nacci and his lawyer left the court by a side entrance, avoiding reporters. The terms of the judicial supervision order ban the trader from leaving France or having any contact with employees of Caisse d'Épargne.

The bank's top three executives quit after the losses became known on Oct. 17.

Jean Reinhart, the lawyer for Caisse d'Épargne, said in a statement that Caisse Nationale des Caisses d'Épargne - the holding company of the Caisse d'Épargne group - had acknowledged the charge against its former trader and confirmed its intention of becoming a civil party in the case "shortly."

A Caisse d'Épargne spokesman has said the bank now calculates the loss was larger than the €600 million, or $751.5 million, it initially announced.

The spokesman declined to provide a new estimate, although the prosecutor's office has mentioned the loss would amount to €751 million.

Paris prosecutors are investigating whether there are grounds for a possible legal case of breach of trust. The Police searched Picano-Nacci's residence on the outskirts of Paris on Wednesday for possible evidence.

Finance Minister Christine Lagarde said last week that an initial investigation discovered "serious holes" in the bank's system of controls. Citing a preliminary report by the French banking commission, she said the losses came in complex trades far removed from the bank's core business.

The bank's own internal investigation found a large number of breakdowns in internal controls and said alerts had been disregarded, French news magazine Nouvel Observateur reported on its Web site Wednesday, citing a copy of the investigator's report that the magazine said it had obtained.

The losses drew comparisons with the much larger trading scandal suffered by another French bank, Société Générale, earlier this year. Société Générale took a €4.9 billion hit closing what it says were unauthorized positions by former trader Jérôme Kerviel.

But n a source close to the inquiry said Thursday that there was no evidence at this stage that the trader used the same techniques as Kerviel to disguise his losses.

http://www.iht.com/articles/2008/10/30/business/30trader.php

Schmuck: French trader suspected of losing more than $751.5 million

Schmuck: French trader suspected of losing more than $751.5 million

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