France’s banking regulator yesterday fined Societe Generale four million euros ($6.3m) over “grave deficiencies” in its internal controls that enabled a massive rogue trade scandal at the bank, that led to nearly $7.8 billion in trading losses announced earlier this year.

In a decision e-mailed to Reuters, the Banking Commission also reprimanded France’s second-biggest listed bank for poor supervision that led to the unauthorized trades by Jerome Kerviel, the former SocGen trader blamed for the losses earlier this year. This 31-year-old trader made his fraud by investing several billion in Futures.

The banking commission said it had also issued a formal warning to Societe Generale for failing to prevent the staggering losses of 4.9 billion euros, which it has blamed on 31-year-old trader Jerome Kerviel.

After interviewing representatives of the bank on June 20, the commission said it detected “grave deficiencies in the internal control system” that “made possible the development of the fraud and its serious financial consequences.”

“The weaknesses brought to light, in particular the deficiencies in hierarchical controls, carried on over a long period, throughout 2007, without being detected or rectified by the internal control systems,” it said.

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One of France’s big three banks, Societe Generale shocked the financial world in January by announcing the losses, incurred as it was forced to unwind more than 50bn euros of unauthorised deals Kerviel is said to have made.

Kerviel turned himself in to police on January 26, two days after the bank revealed the losses, and on January 28 was charged with breach of trust, fabricating documents and illegally accessing computers.

SocGen did not discover Kerviel’s unauthorized trades until Jan. 18, even though the bank’s internal reports showed that Kerviel had in 2007 raised alarms with derivatives exchange Eurex and been the subject of more than 70 “alert” warnings.

The losses from the Kerviel scandal made SocGen vulnerable to a takeover bid from rivals such as BNP Paribas and forced the bank to raise 5.5 billion euros in capital to shore up its finances, also weakened by subprime losses.

The trader is the only person charged over the biggest rogue trade scandal in banking history.