(CNN) -- French bank Societe Generale described Sunday how one of its traders allegedly carried out a $7.2 billion (€4.9 billion) fraud, how the loss came to light and what it is doing to ensure such a case does not recur.

The 31-year-old trader, Jerome Kerviel, started working at the bank in 2000 and spent his first five years there overseeing traders, the bank said in a five-page summary of events.

"Consequently, he had a very good understanding of all of Societe Generale's processing and control procedures," it said.

Kerviel apparently put that knowledge to use after he became a trader for the bank involved in arbitrage -- the practice of buying a portfolio of financial instruments in one market and selling a similar offsetting portfolio at the same time that had a slightly different value. The idea is that, in such trades, the risk of major loss would be minimized.

In fact, Kerviel's first portfolio of financial instruments -- in his case futures -- included genuine operations -- but the offsetting portfolio proved to be "fictitious," the bank said.

"As a result, the trader was able to hide a very sizable speculative position, which was neither consistent with nor related to his normal business activity for the bank," Societe Generale said.

French police questioned Kerviel on Friday and searched his apartment in a Paris suburb Friday night. Efforts to reach his attorneys for comment have been unsuccessful.

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Finance Minister Christine Lagarde said Friday that she would meet with banking regulators Monday to establish a timeline of events that led to the massive trading loss.

According to Societe Generale, Kerviel used his early banking experience "to successfully circumvent all the controls which allow the bank to check the characteristics of the operations carried out by its traders, and consequently their real existence," it said.

For example, it said, Kerviel chose operations that had no cash movements or margin call and that did not require immediate confirmation and he canceled certain operations by using access codes assigned to other bank employees.

In addition, it said, he falsified documents and made sure that his fictitious operations involved different instruments from the ones he had just canceled, thereby reducing his chances of being controlled.

But about mid-January, bank officials detected "abnormal counterparty risk," and Kerviel's explanations led to additional controls being placed on his activities, the bank said.

Then, on Friday, January 18, Kerviel's bosses were informed and an investigation had begun.

The next day, after a large bank told Societe Generale that it did not recognize an operation, the trader "acknowledges committing unauthorized acts and, in particular, creating fictitious operations," his employer said.

By early afternoon on Sunday, January 20, the bank's fraudulent position had been calculated at approximately 50 billion euros ($73.6 billion), and "the unwinding of the fraudulent position begins in particularly unfavorable market conditions."

In fact, the timing was terrible. On Jan. 18, European markets had swooned and two days later, the Asian markets tumbled, too. By January 23, "the unwinding" was completed and the total loss calculated at 4.9 billion euros ($7.2 billion).

Since then, the bank said, it has tightened its controls to ensure such an operation cannot recur. E-mail to a friend

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