French rogue trader hit with prison, US$7 billion fine
By Elaine Ganley, APPARIS--The Paris appeals court on Wednesday ordered former Societe Generale trader Jerome Kerviel to spend three years in prison and pay back a staggering 4.9 billion euros (about US$7 billion) in damages for one of the biggest trading frauds in history.
October 25, 2012, 12:10 am TWN
The 35-year-old Kerviel, who never profited personally from his unauthorized trades, says he was a scapegoat for the bank and a victim of a financial system that runs on greed and profits. His lawyer David Koubbi called the verdict “absolutely lamentable” and said his team will consider taking the case to France's highest court.
A lower court convicted Kerviel in October 2010 of forgery, breach of trust and unauthorized computer use for covering up bets worth nearly 50 billion euros in 2007 and 2008. By the time his trades were discovered and made public, he had amassed losses of almost 5 billion euros on those bets.
The sentence — a five-year prison term, with two years suspended, plus the payback of all the losses he incurred — shocked many in the French public. After a global financial crisis that many blamed on big banks, many believed Kerviel's claim that he was a victim of an unjust system.
The appeals court Wednesday upheld the full conviction and sentence. It did not send Kerviel directly to prison, leaving him free pending his decision on whether to appeal to the Court of Cassation. He has five days to make that decision.
Kerviel arrived at the courthouse in a dark suit and looking tense and left through a back entrance without speaking to reporters. He had sought an acquittal, saying the bank had turned a blind eye to his exorbitant trades as long as they made money. Prosecutors and the bank say that isn't true.
Societe Generale lawyer Jean Veil said the verdict was “a great satisfaction.” He suggested the bank wouldn't make Kerviel pay back the full multibillion-euro sum, and would take into account his income and assets.
“Societe Generale will look at it with realism,” Veil told reporters. But he added, “It would have been indecent for Mr. Kerviel to be able to preserve revenues coming from the exploitation of his fraud” such as book or movie deals.