Jérôme Kerviel, the French rogue trader, was freed on bail last night.

He has admitted that he concealed billions of euros of secret deals but said that he was acting in his bank’s interest and that others also broke the rules, the chief Paris prosecutor said yesterday.

He was released after three days in custody as the scandal around the Société Générale bank widened. There were allegations of insider trading and claims that it had ignored a warning from the German Eurex exchange in November that Mr Kerviel had carried out a heavy, suspect trade.

Sketching Mr Kerviel’s version of the historic €5 billion (£3.7 billion) trading loss, Jean-Claude Marin, the prosecutor, implied that the bank may have turned a blind eye towards illicit trading by its staff.

The man who lost his bank £3.7bn

Jerome Kerviel committed the biggest financial fraud in history after gambling away £3.7 billion on the stock market

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BACKGROUND

• Citigroup hammers SocGen on 'damaged credibility'

• French minister says €5bn trader 'acted alone'

• Furious Sarkozy kept in dark over €5bn fraud

• Chairman already faces laundering charges

Multimedia

• Video: Battered but not beaten

BACKGROUND

• Q&A: how the web of fictional clients was found

• What now for a proud bank laid low?

• Doubt over genius claims for €5bn fraudster

Related Links

• Timeline: How SocGen says it discovered the fraud

• SocGen director offloaded €100m worth of shares

• Societe Generale explains the fraud

Mr Kerviel, 31, had often managed to deflect inquiries about irregular transactions as he ran up an astronomic €50 billion liability.

The junior trader was told that he faced initial charges of forgery, breach of trust and computing abuses at the bank. Judges rejected the prosecutor’s call for a fraud charge and that he be held in jail pending investigation.

Elisabeth Meyer, one of Mr Kerviel’s lawyers, said that his release was “a beautiful victory and a just one”. The trader’s bail conditions require him to abstain from any contact with SocGen employees and any activity in financial markets.

The judges’ decision not to grant the prosecutor’s full demands reflected their doubts about the claims that he was a lone villain who committed historic fraud against his bank, his lawyers said. The prosecution immediately appealed against the ruling.

Many experts and state officials continue to doubt that Mr Kerviel could have fooled SocGen’s security system for more than a year without internal complicity.

In more than 20 hours of questioning that ended on Sunday night, the junior trader told prosecutors that he did not act for his direct personal profit when he breached his tight risk limits from late 2005, Mr Marin said. “He had no intention of plundering the bank. He wanted to be seen as an exceptional trader, an astute market player.”

Mr Kerviel, who earned €110,000 in 2006, was attracted by a promise of a bonus of as much as €300,000 for 2007, he said. At the end of last year, he had registered a profit while masking his huge risks with fictitious counter-operations, said the prosecutor.

His increasingly reckless gamble ended when he was discovered with a €50 billion position on January 19, far more than the bank’s total capital.

The trader’s account to police did little to bolster new claims from Daniel Bouton, the SocGen chairman, that he was a “terrible accident” in a sea of rigour.

“Mr Kerviel indicated that other traders regularly acted as he did, even if it was not to the same degree,” the prosecutor said. “He felt that his winning positions earned him tolerance” from his superiors, he added.

Mr Kerviel told Mr Marin that Eurex had contacted SocGen to flag up problems with his trades two months before his actions were fully investigated.

Mr Marin said that when the trader was questioned by the bank about Eurex’s allegations in November Mr Kerviel had produced fake documents to justify his activities, which satisfied his employer.

Questions about the culture at France’s second bank multiplied yesterday when AMF, the Paris market regulator, reported that Robert A. Day, an American member of SocGen’s supervisory board, had sold shares worth €95 million only two weeks before it announced the rogue trading loss, sparking outrage among small investors in the company.

Mr Day, 65, a non-executive director who also heads a SocGen asset management business called TCW Group, sold €85.7 million in shares on January 10. The two trusts connected to him offloaded almost €10 million of stock the next day.

Mr Kerviel, who has become something of a global folk hero, with songs, videos and internet sites devoted to him, was portrayed by his lawyers as the victim of unscrupulous employers.

“He did not embezzle anything and did not take a cent for himself, so there was no fraud,” said Christian Charrière-Bournazel, one of his lawyers. “The attitude of the bank is incomprehensible.”

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