French ‘rogue trader’ found guilty

Kerviel admits mistakes but insists his bosses knew what he was doing and he was part of a ‘big banking orgy’ [AFP]

A French court has found Jerome Kerviel, the former Societe Generale trader, guilty of all charges in a $7bn fraud scandal and sentenced him to three years in jail.

Judges at the Paris court on Tuesday found the 33-year-old guilty on charges of forgery, breach of trust and unauthorised computer use for covering up bets worth nearly $7bn between late 2007 and early 2008.

He was also ordered to pay back the damages of 4.9 billion euros (now worth $6.7bn) and given an additional two-year suspended sentence.

Kerviel’s lawyer said his client was “disgusted” by the ruling and would be appealing the verdict.

Oliver Metzner said the court did not find Societe Generale “responsible for the creature that it had created”.

“I have the feeling Jerome Kerviel is paying for an entire system,” he said.

‘Unaware of fraudulent activities’

Metzner had called for his client to be acquitted, blaming the bank for the 2008 rogue trading scandal.

But the court said Kerviel had not been given tacit authorisation from his bosses to speculate excessively, and that the bank’s own shortcomings did not exonerate him from his duties as a professional trader.

The judges added that the former trader knew exactly what he was doing in overstepping his remit as a trader and that he sought to hide his trading positions.

Dominique Pauthe, the court’s presiding judge, said defence evidence heard in his trial in June “does not allow us  to deduce that Societe Generale was aware of Jerome Kerviel’s fraudulent activities.”

FROM THE BLOGS

The Prince of Tides By Barbara Serra in The Europe Blog

Throughout a two-week trial in June, Kerviel maintained that the bank tolerated his massive risk-taking as long as he was making money, a claim the bank denies.

Jacky Rowland, Al Jazeera’s correspondent in Paris, said the sentence is being seen as a message to other potential rogue traders that France is going to take financial crimes very seriously.

She added that Kerviel had been seen among the public as “a kind of folk hero”.

“Ordinary people here really feel that Societe Generale got what was coming to it. There is a feeling that there is a culture in trading rooms that encourages greed … speculation and competition between traders to make increasingly risky activities.

“I think the ordinary people here feel that within this banking and trading culture that as long as you win, as long as you make big profits people are willing to turn a blind eye to what you’re doing. It’s only when you lose money that they come down on you like a tonne of bricks.”

‘Banking orgy’

Kerviel has said he made mistakes but maintains his bosses knew what he was doing and that he was part of a “big banking orgy”, as he described it in a memoir published earlier this year.

He wrote that traders habitually hid the size of their bets and bosses turned a blind eye to possible breaches of trading limits as long as earnings were high.

Top earners received congratulations as “good hookers”, Kerviel wrote.

He has said that the trial was a chance “to show the public that I was not an isolated case and there were abuses throughout the banking and trading world”.

Employed by Societe General since 2000, Kerviel worked his way up from a supporting role in an office that monitors trades to a job on the futures desk where he invested the bank’s money by hedging on European equity market indices.

He was arrested in January 2008 and held for six weeks in Paris’ notorious La Sante prison. Since being fired from Societe Generale, Kerviel has worked as a computer consultant.