PARIS - A PARIS broker was due to appear before an investigating judge on Saturday as part of a widening probe into the rogue trading scandal at French bank Societe Generale, sources close to the inquiry said.

The broker, named by sources familiar with the situation as Moussa Bakir of the brokerage Newedge, is being questioned about how much he knew of the activities of Jerome Kerviel, the SocGen trader blamed by the bank for a record $7 billion (S$10.2 billion) trading loss.

Prosecutors said they would ask that the broker be placed under formal investigation and kept in temporary detention on suspicion that he knew about Kerviel's illicit deals.

Kerviel spent the night in a Paris prison after being placed in temporary custody on Friday pending the investigation.

He had originally been allowed to remain free while the investigation into the world's biggest trading scandal continues but prosecutors appealed this, saying his detention was necessary to prevent contact with potential accomplices.

Kerviel's lawyer is appealing the decision.

Societe Generale says Kerviel acted alone in the trading affair by building up unauthorised futures positions that resulted in heavy losses when they were discovered on Jan 18.

Kerviel has acknowledged carrying out unathorised trades but says others in the bank must have known of his activities.

Bakir's employer Newedge executes trades on behalf of SocGen, the world's leading bank in equity derivatives and the second-biggest listed bank in France by market value.

Newedge incorporates a former SocGen brokerage called Fimat and is now co-owned by SocGen and the investment banking arm of Credit Agricole.

Documents seized by police who raided Newedge's office on Thursday show that Kerviel and Bakir had frequent e-mail exchanges, prosecutors said.

Jean Veil, a lawyer for Societe Generale, which unveiled the trading scandal more than two weeks ago, said the links between the two men had made Kerviel's detention 'necessary'.

'The two (Kerviel and Moussa) were friends. They spoke to each other. Was the broker in custody aware of things? Has he helped? The inquiry will find out,' Mr Veil told RTL radio.

'This is the reason why I think a detention (of Kerviel) was necessary,' he added. 'This allows the inquiry to completely deploy while being sure that no proof will disappear.'

Kerviel has been placed under formal investigation for breach of trust, computer abuse anbd falsification, but was originally freed under judicial supervision after investigating magistrates dropped fraud accusations from the charge sheet.

SocGen has maintained that Kerviel acted on his own, but the junior trader has told police it was impossible his supervisors could have been entirely in the dark about his activities.

If the investigation finds that others had a hand in Kerviel's illicit trades, legal experts say prosecutors may be able to re-examine whether to try to press fraud charges.

The trading scandal, which shook France's political and financial establishment, has forced SocGen to announce a 5.5 billion euro rights issue to repair its balance sheet.

A source close to the matter said SocGen's board plans to meet this weekend to finalise details of the issue, which is expected to be launched next week. -- REUTERS

Is this article useful to you?