Court finds 'rogue trader' Kerviel guilty in fraud trial
A criminal court in Paris has sentenced former Société Générale trader Jérôme Kerviel to five years in jail, including two suspended, and to pay 4.9 billion euros in damages for illicit trading that caused huge losses at the French bank.
French “rogue trader" Jérôme Kerviel, who shocked the finance world by single-handedly losing 4.9 billion euros at French bank Société Générale, was found guilty on all three charges brought against him by state prosecutors Tuesday.
The court found Kerviel guilty of forgery, breach of trust and entering fraudulent data into computers, and sentenced him to five years in prison, including two suspended. It also ordered him to pay his former employer 4.9 billion euros in damages.
Kerviel, who had appeared relaxed until the verdict came through, was visibly stunned by the judge’s ruling. Olivier Metzner, Kerviel's lawyer, tried to comfort his devastated client.
Kerviel had maintained that his Société Générale bosses were completely aware of his risky trading, and tacitly approved his actions.
But presiding judge Dominique Pauthe told the court that the evidence provided by the defence during the trial in June "does not allow us to deduce that Société Générale was aware of Jérôme Kerviel's fraudulent activities".
Immediately after the verdict, Metzner told reporters the court’s decision was “totally unreasonable” and that Kerviel was “revolted.” Kerviel himself refused to leave the courtroom to face reporters, said FRANCE 24’s Julien Peyron at the court.
Metzner announced his client would file an appeal.
Asked if Kerviel would be able to pay the bank the 4.9 billion euros in damages, Société Générale 's lawyer Jean Veil, said: “No, I don’t think so.”
Months of deliberation
The verdict against Kerviel came after a highly publicised trial and three months of deliberation by the Paris court.
Metzner tried to present Kerviel as one of many victims of a broken system. He argued that two charges – breach of trust and logging false transactions – should be dropped. Kerviel’s lawyer did, however, plead guilty to the third charge, fraudulent entry of data, accepting that his client tried to disguise his mistakes after he had been caught in a trading culture that spiralled out of control.
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.
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, for which it was
fined four million euros in July 2008.
But the trader’s former bosses, including ex-SocGen CEO Daniel Bouton, accused Kerviel of having “lied to everybody.”
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.