JÉRÔME KERVIEL, the former Société Générale trader whose rogue dealings almost brought down the bank, has been sentenced to three years in prison and ordered to repay his former employer €4.9 billion.
In his verdict on the world’s biggest trading scandal, presiding judge Dominique Pauthe said Kerviel (33) had knowingly exceeded his remit by taking “gigantic” speculative positions without the bank’s knowledge. He put in peril a bank that employed 140,000 people, shook the world’s financial system, and then tried to position himself as a victim of the environment in which he worked, the judge added.
The outcome was a victory for France’s second biggest bank, which has maintained Kerviel acted alone in taking unauthorised positions worth €50 billion that cost SocGen €4.9 billion to unwind.
Kerviel received a five-year sentence, including two suspended, and the three-member panel of judges acceded to the bank’s request that its former trader should – at least symbolically – have to cover its losses. SocGen’s lawyer, Jean Veil, admitted Kerviel would “probably not” repay the €4.9 billion, which is the highest sum of damages awarded by a French court and roughly equivalent to the GDP of Monaco. The former trader currently works as an IT consultant for €2,300 a month.
Kerviel’s lawyer said he would immediately appeal the verdict, which he said was senseless and unreasonable. “Jérôme is outraged . . . the people who created him have been totally exonerated,” Olivier Metzner told journalists outside the courtroom at the Palais de Justice in Paris. He could not accept “Jérôme Kerviel alone is responsible for the excesses and the crisis in the banking system”.
Although Kerviel admitted to building up the risky trading positions leading up to the loss in early 2008, he insisted breaches in the bank’s risk-control system were tolerated and that superiors turned a blind eye as long as the money was rolling in.
More than half a dozen books have been written about Kerviel. These include a memoir he published this year, and a comic book that reflected the popular portrayal of the former trader as a young outsider from a small Breton town encouraged by a risk-taking culture that ran through the banking system.
SocGen admitted internal failings in its controls – for which it was fined €4 million in 2008 by the banking watchdog – but was adamant there was no tacit complicity on its part. Reading the 73-page judgment that endorsed that position, Judge Pauthe said defence evidence heard during the trial in June “does not allow us to deduce that Société Générale was aware of Jérôme Kerviel’s fraudulent activities”.
Mr Veil, for SocGen, said it had been “very clearly shown that Jérôme Kerviel’s behaviour, his lies, were so sophisticated that the bank could not suspect what he was doing”. Dressed in a black suit, Kerviel left the court yesterday without answering journalists’ questions. He remains at liberty pending the appeal, but has been banned from any banking activity.