New York (HedgeCo.Net) – French officials have arrested a trader who allegedly lost more than $1 billion in complex derivative trades. Boris Picano-Nacci of mutual bank Caisse d’Epargne was taken in for questioning last week, days after the loss forced the bank’s top three executives to part ways.
Prosecutors in Paris are currently investigating whether or not they can nail the 33-year-old trader for a possible breach of trust.
A copy of the bank’s internal investigation was said to have been obtained by French news magazine Nouvel Observateur, when they published the findings on Wednesday.
According to that report, Caisse d’Epargne found lax internal controls and several alerts that had been disregarded.
The bank has stated that this was an error made by a small team of traders, who made a bad bet on the direction of the stock market while exceeding their trading risk limit.
French Finance Minister Christine Lagarde revealed that an initial investigation had uncovered “serious holes” in the bank’s controls.
This is the second trading scandal to rock a French bank this year. Societe Generale made headlines in January for its $7 billion loss thanks to 31-year-old rogue trader Jerome Kerviel.
Caisse d’Epargne is currently planning a merger with French mutual lender Banque Populaire.
Julie Scuderi
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