The US Department of Justice is looking into stock sales by a member of French bank Societe Generale's board shortly before the bank announced billions of dollars in losses by a single trader, a source close to the investigation told Reuters today.
The US Attorney for the Eastern District of New York is taking the lead, the source said, referring to the investigation of Robert A. Day, a board member of Societe Generale and investment manager of US-based Trust Co of the West.
The US Securities and Exchange Commission is also probing stock sales by Day and by two foundations associated with him, The Wall Street Journal newspaper reported on its Web site on today.
Day and the foundations sold about $140 million of the bank's stock some two weeks before the bank notified its board about the $7.3 billion in trading losses, the Journal said, quoting unnamed sources familiar with the matter.
Societe Generale publicly revealed the huge trading losses on January 24th and blamed them on a single rogue trader, Jerome Kerviel.
The bank said on Monday its New York branch was contacted by the US Attorney's Office for the Eastern District of New York on January 25th regarding the trading losses it announced on January 24th.
"The bank is cooperating fully with the investigation," Societe Generale said in an e-mailed statement on Monday.
The bank had no immediate comment on the probe involving Day.
The bank has already said Day's sales were during a window of time when such trades were permitted under Societe Generale's trading policies for directors.