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Top French court upholds prison sentence for ‘rogue trader’ Kerviel


France’s highest court ruled on Wednesday to uphold a three-year prison sentence for Jérôme Kerviel, a former employee at Société Générale whose rogue trades nearly brought the bank to the brink of collapse in 2008.


The court decided, however, to overturn a past ruling ordering Kerviel to pay SocGen 4.9 billion euros ($6.8 billion) in civil damages to compensate the bank for its losses, saying that the last appeals verdict in 2012 had highlighted SocGen’s own risk-control failures, yet had not quantified their share of the blame.

The size of the fine, which essentially meant the bank could have had a lifetime claim on Kerviel’s income, had caused an outcry from the public and some politicians who saw it as excessive.

A new civil trial is now due to take place at an appeals court in Versailles, a suburb west of Paris, to decide on the eventual damages Kerviel should pay, making it likely that SocGen will face further scrutiny over its risk controls at the time the former trader was working for the bank.

This may cost SocGen financially, according to Mabrouk Sassi, a Paris-based lawyer specialising in tax and company law. The bank was legally entitled to a 1.7 billion-euro tax deduction against Kerviel’s losses, but if the new trial apportions significant blame to the bank, it may find itself facing a new tax bill.

“There may be repercussions for the tax situation,” Sassi said. “It will all depend on the figure attributed to SocGen’s responsibility. If it is marginal, say 5 percent of the losses, it’s not serious. But if it becomes half, then it’s colossal. The tax authorities will decide in the end.”

SocGen’s lawyer, Jean Veil, played down this possibility, saying that the relevant fiscal jurisprudence would not apply.

Kerviel has spent three years fighting to overturn his conviction for breach of trust, forgery and fraudulent data manipulation. He has never denied masking his 50 billion euro positions, but has accused his bosses of knowing what he was doing. SocGen, meanwhile, has insisted Kerviel acted alone.

Since February, Kerviel and his lawyer David Koubbi have used social media websites and traditional press outlets to portray the looming verdict as one individual’s struggle against the “tyranny” of high finance, with Kerviel even meeting the Pope and embarking on a march from Rome to Paris.

Despite the fact that his prison sentence was upheld, Kerviel welcomed the news that the fine had been overturned.

“It’s really great news. All I will say is that I am going to continue walking,” he told reporters in the northern Italian town of Modena. “The fight goes on.”

Koubbi also claimed victory and told reporters he would ask the Versailles appeals court to investigate SocGen’s conduct. SocGen’s lawyer, Jean Veil, disagreed, saying, “We do not at all feel that we have lost this case.”

Kerviel was originally convicted in 2010, and during a retrial in 2012, Koubbi said his client had been a victim of a conspiracy of “powerful” French elites.

But with little in the way of new evidence from the defence, the original appeals court sided with SocGen and laid the blame exclusively at Kerviel’s feet.

Kerviel’s defence team said it would take from two weeks to a month before the court officially notifies him of its ruling, at which point he would have to start serving his sentence.


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