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How it happened

Here is how the bank says a trader, acting alone, inflicted the loss. Starting last year, Jerome Kerviel, a 31-year-old futures trader, made big bets on European equity markets, using more money than he was authorised to wager, the bank said. When they brought losses, he hid them by tweaking data in the bank’s computer systems. Basically he was his own watchdog. He used knowledge gained when he worked on the security control department, which monitors transactions, to escape detection.

He knew when the security checks were coming, and he covered his tracks by creating fictitious transactions. The trader bet earlier this month that European equity markets would rise. Instead, they tumbled, compounding his losses to the point that he could no longer conceal them. Societe Generale learned what he was up to on Saturday. It was forced to sell the contracts to cover their positions on Monday — the worst day in world markets since Sept. 11, 2001. Kerviel has been fired. France’s second-largest bank will try to raise €5.5 billion in new capital to shore up its finances. While financial controls have increased, so have the volumes of money traded on financial markets, and the number of different instruments for trading. Futures trading is inherently fast-moving and risky. — AP

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