SocGen checks missed $73bn trading bet

Societe Generale SA (SocGen) said trader Jerome Kerviel built up positions in European stock index futures of 50 billion euros ($73 billion) before the French bank discovered the trades and unwound them last week.

According to a report by Bloomberg, Kerviel, 31, who is being questioned by France's financial police for the third day, took advantage of the bank's practice of checking only net trading positions rather than gross bets to conceal his subterfuge with phony hedges, Paris-based Societe Generale said yesterday. The trading loss of 4.9 billion euros was the biggest in banking history.

The trading shortfall, more than four times the $1.4 billion of losses by Nick Leeson that brought down Barings Plc in 1995, has raised fresh doubts about risk management at the world's biggest financial institutions and prompted calls for improvement from French President Nicolas Sarkozy, the report added.