PARIS - French bank Societe Generale said Thursday it has uncovered a $7.14 billion fraud — one of history's biggest — by a single futures trader who fooled investors and overstepped his authority.
The fraud destabilized a major bank already exposed to the subprime crisis. France's second- largest bank by market value said it would be forced to seek $8.02 billion in new capital.
Trading in Societe Generale's shares, which have lost nearly half their value over the past six months, was suspended on the Paris bourse. It was unclear when trading would resume.
Single weekend of fraud
The bank said it detected the fraud at its French markets division the weekend of Jan. 19-20. In a statement announcing the discovery, it called the fraud "exceptional in its size and nature."
It said a trader at the futures desk had misled investors in 2007 and 2008 through a "scheme of elaborate fictitious transactions." The trader, who was not named, used his knowledge of the group's security systems to conceal his fraudulent positions, a statement from the bank said.