JEROME Kerviel was able to amass 50 billion euros (US$78.7 billion) in unauthorized futures positions at Societe Generale SA because of fragmented internal controls, the bank said.
Kerviel's supervisors failed to "react in an appropriate manner to several alert signals" and missed at least 1,071 bogus trades, a special committee of the bank's board found.
Unwinding those positions cost a record 4.9 billion euros, the biggest trading loss in banking history.
His supervisors missed the level of his gains, cash flows, brokerage expenses and overlooked warnings from Eurex AG, Europe's biggest futures exchange, the report said.
The 31-year-old former trader is under investigation on charges of breach of trust, falsifying documents, and hacking into the bank's computers to carry out and conceal trades.
"It really shows that a profit-driven mentality overrode control concerns," said Brice Vandamme, a London-based analyst at Deutsche Bank AG.
The losses wiped out almost two years of pretax profit at the investment bank and brought on shareholder suits against the bank in France and the United States, said Bloomberg News.
Chairman Daniel Bouton gave up his role as chief executive officer after the bank posted a record fourth-quarter loss. Societe Generale said last month it will spend as much as 100 million euros this year to improve controls.
The investigators, who interviewed 315 people in Europe, Asia and America in compiling the 71-page report, said it found no evidence that other employees were using similar methods to carry out and conceal trades.
Futures bets
Kerviel's manager "tolerated" bets on the direction of index futures and certain equities that were unjustified by his "assignment and level of seniority," the report said.
As a trader on the bank's "Delta One" desk, his job was to use large volumes to arbitrage small price differences between equity index futures and forwards.
Although Kerviel has said he acted alone, the report said 15 percent of the trades used to cover the unauthorized positions were registered by his trading assistant, indicating that person must have been aware of the fictitious trades.
A phony trade of 1.5 billion euros in January was registered by the assistant, who wasn't identified in the report and couldn't be questioned by the board's investigators, the document said.
Kerviel was motivated to carry out the phony trades to "significantly increase his 'official' earnings, and therefore to increase indirectly the amount of bonus that he could hope to receive," the report said.