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U.S. Probes Stock Sales By SocGen Board Member

The U.S. 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.

AP

"The U.S. 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 U.S.-based Trust Co. of the West.

The U.S. 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 Monday.

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 on Jan. 24 publicly revealed the huge trading losses that it blamed on a single rogue trader, Jerome Kerviel.

The bank has already said Day sold during a window of time where such trades were permitted under Societe Generale's trading policies for directors.

"No inside information was used in any way with respect to these December and January sales," the bank said Jan. 29. "Mr. Day, like the other board members, was not advised of Mr.
Kerviel's trading losses."

A spokesman for Day, Josh Pekarsky, echoed the bank's comments about Day selling stock during a window of time when such trades were permitted.

"All required government disclosures were made. No inside information was used in any way with respect to these sales," Pekarsky said Monday in an e-mailed statement. "Mr. Day has
pledged his cooperation into any inquiries of this matter."

Two sets of small shareholders have filed a complaint about Day's trades alleging insider trading.

According to the Journal, U.S. prosecutors have opened a criminal probe related to the bank, but no other details were given.

The FBI, SEC and U.S. attorney's office in Brooklyn declined to comment.

In Paris, Economy Minister Christine Lagarde issued a report that said Societe Generale had been warned last year that its security systems were not up to par and listed other problems that had come to light during an investigation of France's second-largest listed bank.

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