"Rogue trader" Jérôme Kerviel (pictured), the man accused of single-handedly losing 4.9 billion euros at French bank Société Générale in 2008, faces sentencing in a Paris courtroom on Tuesday.
At 10am (GMT+2) on Tuesday, one hour after the start of trading at the Paris Bourse, the financial world will turn its eyes to a courthouse in the French capital. After three months of deliberation, the Paris criminal court will deliver its verdict in the highly publicized trial of Jérôme Kerviel, the former Société Générale trader who made 4.9 million euros vanish from the bank’s leger in 2008.
On discovering the risky deals in January 2008, Société Générale was forced to unwind positions worth 50 billion euros (69 billion dollars) – equal to nearly all its shareholder capital at the time.
Three charges against the former trader
Kerviel faces up to five years in prison and a 375,000-euro fine for his trading excesses and subsequent attempts to conceal them. His former employers at the French bank have brought three charges against him, namely “breach of trust,” “logging false transactions,” and “fraudulent entry of data into a computer system.”
Throughout his trial, Kerviel insisted his employers were well aware of his actions. His lawyers have presented him as one of many victims of a broken system. They argue that two charges – breach of trust and logging false transactions – should be dropped. Kerviel’s lawyers did, however, plead guilty to the third charge, fraudulent entry of data, accepting that their client tried to disguise his mistakes after he had been caught in a trading culture that spiralled out of control.
Planetary trauma and banking mistrust
Société Générale, which is once again poised to report billions of euros in profits, has acknowledged some shortcomings in the way it controlled its traders. But its lawyers have placed the blame for the bank’s financial losses squarely on Kerviel’s shoulders. The trader’s former bosses, including former SocGen CEO Daniel Bouton, accused him of having “lied to everybody.” They want 4.9 billion euros in compensation from their former employee. A dissenting voice within the SocGen camp did however come to Kerviel’s aid. Eric Cordelle, Kerviel’s immediate superior at the time, said he lacked the resources and training required to effectively monitor his traders.
Public prosecutors, who have also brought charges against Kerviel, rejected the thesis of SocGen’s passive complicity in the affair. They have requested four years in jail and one year suspended for Kerviel. At the hearings, both prosecutors presented a severe indictment of the “rogue” trader. They told the court he had caused “planetary trauma” and contributed to a general mistrust of the banking industry.
Date created : 2010-10-04