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France

'Rogue trader' says he is scapegoat of financial system

Text by FRANCE 24

Latest update : 2010-10-06

Former trader Jérôme Kerviel, who was sentenced to three years and fined 4.9 billion euros in damages Tuesday for illicit trades that led to huge losses at French bank Société Générale, has said he is a scapegoat of the financial system.

“Rogue trader" Jérôme Kerviel told French radio Europe 1 on Wednesday that he felt like the scapegoat of an entire system, and that he was “crushed” after a Paris court sentenced him to three years in jail and ordered him to pay five billion euros in damages to his former employer, French bank Société Générale.

"I have the feeling that [the court] wanted me to pay the price for everyone else and that it was necesssary to save the [Société] Générale bank and that they killed soldier Kerviel," he said.

The former trader will appeal the court’s guilty verdict in the white collar fraud case, his lawyer said, adding that his client would remain free pending the appeal.

Kerviel, who shocked the finance world by single-handedly losing 4.9 billion euros at Société Générale, was found guilty on all three charges brought against him by state prosecutors on Tuesday.

For forgery, breach of trust and entering fraudulent data into computers, the court sentenced Kerviel to three years in prison with two years suspended. It also ordered him to pay Société Générale 4.9 billion euros in damages.

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".

Unprecedented penalty

The 4.9 billion euros in damages that Kerviel must repay is the largest sum ever demanded from an individual by a French court, a sum so staggering it drew gasps in the courtroom.

On Wednesday, Luc Chatel, a spokesman for the French government, said the French bank should “perhaps” show leniency in relation to the astronomical sum.

French media reported that it equals more than 170,000 years of wages for Kerviel, who now declares an income of 2,300 euros per month as a computer consultant.

Asked if Kerviel would be able to pay the bank, Société Générale 's lawyer Jean Veil, said: “No, I don’t think so.”

The nearly five billion euros is not a court fine, and can be waived by Société Générale. Veil told reporters he thought the bank should instead seek to recover any profits that Kerviel could make from the highly-publicised affair, such as any earnings the former trader makes for the sale of his book, The spiral: memoires of a trader.

The damages are also suspended during the appeals process, Metzner said.

Back to profits

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.

But the bank, 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.

The bank's shares rose after the announcement of the verdict, closing up 3.6 percent at 42.33 euros (US$58.33) on Tuesday.

Kerviel, a soft-spoken and debonair man from western Brittany, has garnered considerable public appeal in France for his image of being a scapegoat for powerful corporate interests.

 

Date created : 2010-10-06

  • FRANCE

    Court finds 'rogue trader' Kerviel guilty in fraud trial

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