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‘Rogue trader’ Jérôme Kerviel loses appeal
Société Générale “rogue trader” Jérôme Kerviel lost his appeal Wednesday and will serve three years in prison. Kerviel declared after the verdict that he would take his case to France’s highest appeals court.
A Paris court has upheld a prison sentence imposed on Société Générale “rogue trader” Jérôme Kerviel, whose reckless gambling as one of the bank’s traders cost the firm 4.9 billion euros in 2008.
Kerviel must serve three years of a five-year jail term, the sentence handed down after a guilty verdict for breach of trust, forging documents and computer hacking in 2010. Prosecutors in the appeal process had asked for Kerviel to serve the full five years.
He was also told he had to “repay” all 4.9 billion euros he lost - a ruling his layer David Koubbi had previously described as a “civil death sentence.”
The court did not issue the order for Kerviel to go directly to prison, although this is expected in the coming days.
Kerviel, who insists he acted with the complicity of Societe Generale, vowed that he would keep fighting and ensured he would avoid prison for the immediate future by taking his case to France's highest appeal court.
"I'm completely devastated. I do not understand this judgement and I have no hesitation taking it to the final court of appeal," Kerviel told RTL radio hours after his conviction was upheld.
Kerviel never denied masking the huge 50-billion-euro positions that tore a hole through Société Générale's balance sheet and reputation at the dawn of the financial crisis. He also admitted putting fictitious orders through discreet channels - for example via a little-monitored internal unit.
"I [hid the positions] to save appearances,” he said during his 2010 trial. “What I was doing was obvious to everyone, but I wanted to give the impression, the appearance of a cover.”
The 35-year-old former trader insisted throughout the investigation that his Société Générale bosses had known exactly what he was doing – and that the ultimate responsibility lay with them.
In an appeal hearing in June 2012, Kerviel claimed the French bank had let him amass 50 billion euros in stock index futures so it could later hide losses in “sub-prime” loans.
Société Générale strongly denied these assertions and insisted that Kerviel was working illegally and entirely on his own, a view upheld by the court.
"Jerome Kerviel was the sole creator, inventor and user of a fraudulent system that caused these damages to Société Générale," the court's written ruling concluded.
Société Générale, which has acknowledged management failures, was fined 4 million euros by the French Banking Commission in 2008 for failures in its risk control system.
Two of Kerviel’s direct managers were sacked, and in 2009 Société Générale Chairman Daniel Bouton was forced to resign.
Bouton described Kerviel as an “evil genius” whose “catastrophic” actions almost destroyed the 148-year-old bank