A new court battle will be held today over the detention of French rogue trader Jerome Kerviel, while Societe Generale (SocGen) is to soon launch an US$8 billion capital increase to cover the losses they blame on him.
The decision by a Paris appeals court on Friday to back a prosecution demand that the 31-year-old trader be held in custody was the latest twist in the worst investment banking scandal in history.
His lawyer, Elisabeth Meyer, said she would go to a higher appeals court today.
The prosecution said Kerviel could influence any accomplice or witness and at the same time as the hearing was held, police questioned a broker at a Societe Generale subsidiary through which Kerviel handled many of his tens of billions of dollars in European share trades.
The broker was released on Saturday but remains an assisted witness, meaning he could still face charges.
SocGen has blamed Kerviel for 4.82 billion euros (US$7.1 billion) of losses from unauthorized trades worth at least 50 billion euros. He faces charges of breach of trust, fabricating documents and illegally accessing computers.
France's Financial Markets Authority was to meet on Friday to review SocGen's planned 5.5 billion euro capital increase to cover the loss and some of the 2 billion euros lost on the US subprime loan market.
If it approves, SocGen chairman Daniel Bouton could launch the capital increase in coming days.
The bank has been shaken to the core since suspicions about Kerviel's trades were first raised on Friday, Jan. 18. Before the weekend was over, the bank was in "potentially mortal" danger and the Bank of France had agreed a secret resuscitation plan.
According to official statements and SocGen's own account, the bank questioned Kerviel on Saturday. Early on Sunday afternoon, the bank had enough information to estimate the damage: The 50 billion euros in market exposure far exceeded its shareholder funds.
Bouton informed Bank of France Governor Christian Noyer, who authorized him to unwind the contracts. This began on the Monday when stock markets were falling heavily, adding to its exposure.
Amid global market turmoil, the US Federal Reserves cut interest rates sharply on the Tuesday.
By Wednesday, Jan. 23, SocGen has closed the positions. Noyer informed the French government, which was infuriated at not being told earlier, the European Central Bank and the New York Federal Reserve of the crisis.
Early on Thursday, SocGen revealed that a lone trader had lost it 4.8 billion euros, wiping out most of its profit for last year. It also disclosed 2 billion euros in losses on subprime loans in the US and said it had investment bank guarantees for new capital of 5.5 billion euros.
A storm broke on many fronts, with talk of a takeover, that has only been eased by the capital increase plan.
US SANCTIONS: The Taiwan tech giant has ended all shipments to China-based Sophgo Technologies after one of their chips was discovered in a Huawei phone Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) suspended shipments to China-based chip designer Sophgo Technologies Ltd (算能科技) after a chip it made was found on a Huawei Technologies Co (華為) artificial intelligence (AI) processor, according to two people familiar with the matter. Sophgo had ordered chips from TSMC that matched the one found on Huawei’s Ascend 910B, the people said. Huawei is restricted from buying the technology to protect US national security. Reuters could not determine how the chip ended up on the Huawei product. Sophgo said in a statement on its Web site yesterday that it was in compliance with all laws
SPEED OF LIGHT: US lawmakers urged the commerce department to examine the national security threats from China’s development of silicon photonics technology US President Joe Biden’s administration on Monday said it is finalizing rules that would limit US investments in artificial intelligence (AI) and other technology sectors in China that could threaten US national security. The rules, which were proposed in June by the US Department of the Treasury, were directed by an executive order signed by Biden in August last year covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The rules are to take effect on Jan. 2 next year and would be overseen by the Treasury’s newly created Office of Global Transactions. The Treasury said the “narrow
TECH TITANS: Nvidia briefly overtook Apple again on Friday after becoming the world’s largest company for a short period in June, as Microsoft fell to third place Nvidia Corp dethroned Apple Inc as the world’s most valuable company on Friday following a record-setting rally in the stock, powered by insatiable demand for its specialized artificial intelligence (AI) chips. Nvidia’s stock market value briefly touched US$3.53 trillion, slightly above Apple’s US$3.52 trillion, London Stock Exchange Group data showed. Nvidia ended the day up 0.8 percent, with a market value of US$3.47 trillion, while Apple’s shares rose 0.4 percent, valuing the iPhone maker at US$3.52 trillion. In June, Nvidia briefly became the world’s most valuable company before it was overtaken by Microsoft Corp and Apple. The tech trio’s market capitalizations have been
Two scoops of pistachio, one of corruption. For years holidaymakers have guzzled Sicilian gelato at famous parlors in Palermo, unaware that the booming businesses were controlled by organized crime. The fraud was a textbook case for detectives trained to sniff out dirty money, but even with three mobster classics — a suspicious bankruptcy, a front man and a scheming “Godfather” — it took years for investigators to shut the operation down. The Brioscia brand, made up of two ice cream parlors, was thriving at the end of the 2010s, attracting locals and foreign visitors alike with its glittering gold stars on travel
RSS