By Sudip Kar-Gupta and Thierry Leveque
PARIS (Reuters) - A Paris court agreed on Tuesday to freeJerome Kerviel, the trader accused of causing record losses atFrench bank Societe Generale, under tight controls pendinginvestigation.
"Jerome is very happy, I don't think he expected it," saidElisabeth Meyer, one of his lawyers, after visiting him inprison following the court session. Kerviel is expected to bereleased later on Tuesday.
SocGen unveiled 4.9 billion euros (3.8 billion pounds) oflosses in January in the biggest trading scandal in historywhich it said was caused by rogue deals carried out by Kerviel,a junior trader at the bank.
The bank was already facing losses from the subprimemortgage crisis in the United States that has claimed somebig-name victims, most recently Bear Stearns.
Kerviel is barred from entering a trading room or anexchange, may not engage in any activities related to financialmarkets, and has to present himself weekly at a police station.
He cannot leave the Ile-de-France central French regionthat includes Paris without permission and must surrender hispassport and identity card. He has to inform the investigatingmagistrates each month where he is staying.
He cannot meet witnesses or other parties involved in thecase. His lawyer reiterated Kerviel acted alone.
The public prosecution service said it would not appealagainst the decision.
Societe Generale's lawyer, Jean Veil, said he was pleasedwith the strict controls under which Kerviel was placed.
"The Societe Generale is a victim, and I believe victimsshould not cry out for vengeance but to obtain reparation ofthe damages," Veil said.
SANTE PRISON
Kerviel, 31, is under formal investigation for breach oftrust, computer abuse and falsification and has been held inParis's La Sante prison since February.
SocGen has carried out an internal investigation into theKerviel affair. Its report, published on February 20, supportedthe bank's previously expressed view that Kerviel acted alone.
The report reiterated that Kerviel started building upunauthorised trading positions in 2005 and 2006 for "smallamounts", but they got bigger from March 2007 onwards.
By the time SocGen discovered what was going on in lateJanuary, Kerviel had amassed a position worth 49 billion euros,which SocGen unwound between January 21 and January 23 in analready falling stock market.
SocGen's losses have made it vulnerable to a takeover bid.France's biggest listed bank, BNP Paribas, has said it islooking at SocGen.
In 1999, BNP narrowly failed to buy its rival.
The bank has also come under pressure from leadingpoliticians and regulators.
Bank of France Governor Christian Noyer criticised SocGen'srisk-control systems and French President Nicolas Sarkozy hasmade clear he thinks SocGen Chairman Daniel Bouton should quit.
Bouton has said he has a mandate from the board to keep hisjob and continue with the bank's standalone strategy.
On Monday, the bank promoted Chief Financial OfficerFrederic Oudea to the post of deputy chief executive.
Oudea now sits above Jean-Pierre Mustier, the head ofSocGen's investment banking arm whose reputation suffered fromthe trading debacle.
(Writing by Marcel Michelson, Editing by Quentin Bryar andKeith Weir)
