June 25 (Bloomberg) -- Jerome Kerviel, blamed by Societe Generale SA for its 4.9 billion-euro ($6.9 billion) trading loss last year, should face trial on three criminal charges, prosecutors told judges in a report today.

Kerviel, 32, should be tried for abuse of trust, falsifying documents and computer hacking according to the report, said a Paris prosecution spokesman, who can’t be identified under office policy. The recommendations were in a report to the two judges investigating the Kerviel case.

The recommendation, while not binding on the judges, is one of the last steps before the conclusion of the 17-month criminal probe into Kerviel’s actions. Societe Generale said the trading loss, disclosed on Jan. 24, 2008, came after it sold positions that Kerviel had taken without authorization and hidden with faked hedges.

“The prosecutors give their opinion, but it’s the judge who decides whether to refer him to trial,” said Stephane Bonifassi, a white-collar criminal lawyer in Paris. “I think the judges will recommend he stand trial. Probably, things will move fairly quickly now.”

Olivier Metzner, Kerviel’s lawyer, said the report was “totally contradictory.” The defense has a month to submit a response.

The former trader has admitted to evading controls and faking documents to disguise his activities. He has said that his superiors knew what he was doing and that his gains were registered in the bank’s accounts.

Investigating Judges

Investigating judges Renaud Van Ruymbeke and Francoise Desset rejected an appeal from Metzner to reopen their inquiry and seek additional expertise to review the Paris-based bank’s financial records for insight as to whether Kerviel’s unauthorized trading activities were known, as he claims.

A Societe Generale-commissioned report found Kerviel had amassed 50 billion euros in unauthorized futures positions thanks in part to fragmented internal controls. His 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.

Jean Veil, a lawyer for Societe Generale, declined to comment because he hasn’t seen the report.

The charges recommended by the prosecutors are nearly identical to those they initially suggested when referring the matter for investigation. The two judges rejected a fraud claim, saying there was no evidence that Kerviel had profited from his actions, a requirement under French law.

If tried and found guilty, Kerviel would face as much as five years in prison and a 375,000-euro fine.

To contact the reporter on this story: Heather Smith in Paris at hsmith26@bloomberg.net

Last Updated: June 25, 2009 14:33 EDT