Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

SocGen Trader Gives Himself Up to Police

PARIS -- A junior trader blamed for causing a $7 billion loss at French bank Societe Generale has handed himself into the police and is cooperating with their investigation, a prosecution official said on Saturday.

Jerome Kerviel, 31, turned up at the headquarters of the finance police in southeast Paris during the afternoon and is likely to be held for up to 48 hours before prosecutors decide whether to launch legal proceedings against him.

"All is going well. He is cooperating and is ready to explain what happened," Jean Michel Aldebert, the head of the financial section of the Paris prosecutors office, told reporters late Saturday.

SocGen has accused its trader of taking "massive fraudulent" positions in 2007 and 2008 on European equity market indices, which left them nursing massive losses as they unwound the positions in plunging markets at the start of last week.

On Friday, police visited the gleaming Societe Generale offices where Kerviel used to work, poring over his computer records, and also searched the apartment where he lived on the western outskirts of Paris.

Kerviel's family say he is being made a scapegoat for the world's worst rogue-trading scandal.

Authorities are putting pressure on SocGen's managers to explain how a bank that won accolades for innovation and boasted state-of-the-art risk controls could have been tripped up by a junior trader acting alone.

SocGen defended its handling of the situation Sunday, but admitted that its risk systems had failed to detect the 50 billion euro ($73.3 billion) market bet by a lone trader.

Many market experts have cast doubt on SocGen's affirmation that a single trader was able to conceal positions that were higher than the gross domestic product of Morocco.

In a statement on Sunday, the bank said its staffer created fictitious accounts to make it look as though his positions had been covered, when in fact they remained open.

It said he also falsified documents to justify his actions. The trades only came to light on Jan. 18 and SocGen said the trader had acknowledged "committing unauthorized acts and, particular, creating fictitious operations."

SocGen's corporate and investment banking chief Jean-Pierre Mustier said there was no evidence of an accomplice, adding just one trader had unbundled the massive exposure.

The scandal at SocGen struck at the height of a global credit crisis, set off by a meltdown in U.S. subprime mortgages. The the turning sour of the mortgage market has forced banks around the world to take tens of billions of dollars in charges as the value of their exposures crumbled.

French President Nicolas Sarkozy demanded changes to the running of international financial markets.

"We have to put a stop to this financial system which is out of its mind and which has lost sight of its purpose," Sarkozy said on Saturday while on a visit to India.