Regulation could not have stopped SocGen case says EU's McCreevy

By Huw Jones

BRUSSELS (Reuters) - No legislative framework could have prevented the alleged fraud that caused huge losses at French bank Societe Generale (SocGen), the European Union's top financial regulator said on Tuesday.

"No regulation in the world could have foreseen what happened last week in France," EU Internal Market Commissioner Charlie McCreevy told reporters.

On January 24, France's second-largest listed bank said it had uncovered massive unauthorised stock trading by an employee that led to 4.9 billion euros (3.6 billion pounds) of losses at the 144-year-old bank.

Jerome Kerviel, a 31-year old trader, was freed pending further investigations on Monday after prosecutors failed to persuade judges to proceed with a full-scale fraud probe.

The events in Paris, coupled with six months of turmoil in the credit markets, have put pressure on legislators to act.

McCreevy likened the market crisis, which began with defaults in the U.S. home loans market that hit the headlines in August, to the bursting of the Internet bubble, which forced a painful learning process.

Many of the U.S. mortgage debts had been monetised into complex structured products, a process known as securitisation, and sold on.

"The same will happen for securitisation. There will be more transparency, more data and statistics," McCreevy earlier told a conference on financial markets.