American regulator investigates share sale by SocGen director

American regulators have begun inquiries into Société Gé*érale, the French bank caught up in an alleged €4.9bn (£3.7bn) rogue trading scandal, and a director who sold shares days before the losses were revealed.

Meanwhile French officials have unveiled the results of their investigation into the bank's losses.

The Securities and Exchange Commission, the US financial regulator, is looking into share sales by Mr Robert Day, a non-executive director of SocGen who is based in the US.

A spokesman for Mr Day said he had not received formal notice from the SEC. "All required government disclosures were made. No inside information was used in any way with respect to these sales. Mr Day has pledged his co-operation into any inquiries of this matter," he added.

Mr Day is already the subject of a lawsuit in France. Frederik-Karel Canoy, a French lawyer, filed a suit against the bank and Mr Day on behalf of 100 minority shareholders shortly after the scandal emerged. The non-executive director and his family's trusts and charitable foundations sold €45m (£35m) worth of shares on 18 January, although the bank said he had no knowledge of the losses until two days later.

The Financial Services Authority and the French regulator, the Autorité des Marchés Financiers, have been scrutinising whether any trades anticipated SocGen's unwinding of the positions built up by Jérôme Kerviel last month.

Also yesterday the French Finance Minister, Christine Lagarde, presented the Prime Minister, François Fillon, with the findings of an investigation into the bank begun on 25 January. The report called for tougher internal controls across the banking industry, and increased penalties for risk management failings.

It said SocGen's internal systems did not function as they should have, and listed eight deficiencies within the group's controls, including surveillance of nominal positions and cash flows. It noted the bank's failure to follow up warnings from Eurex, the European derivatives exchange, which queried trading positions at the end of last year, and criticises its supervision of M. Kerviel.

Ms Lagarde praised the way SocGen had unravelled M. Kerviel's trading position, and added that the sale did not break market rules.

SocGen said the report had not called into questions its systems used to manage market risk, and added that measures were in place to deal with the controls that were circumvented by the fraud.

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