Kerviel Judge Says Subprime Evidence Not New, Orders Testimony
By Heather Smith - Jun 11, 2012 6:40 AM ET
Evidence Jerome Kerviel presented to support claims Societe Generale SA (GLE) let him amass 50 billion euros ($63 billion) in stock index futures trades so it could later hide losses on subprime loans shows “nothing new” to the Paris judge hearing the appeal against his 2010 conviction.
Judge Mireille Filippini, who last week demanded evidence from Kerviel’s lawyers to support allegations that he was caught up in a conspiracy, said an unsigned letter and documents related to a Societe Generale account’s trades from January 2008 wasn’t sufficient.
Jerome Kerviel is seeking to win a full dismissal of the case against him by showing the bank knew he took unhedged positions that exceeded limits, and therefore that he didn’t commit a breach of trust by amassing 50 billion euros in European stock index futures. Photographer: Balint Porneczi/Bloomberg
The anonymous letter was “founded on rumors,” and the documents show “nothing new to the court,” Filippini said today. She ordered Kerviel’s attorneys to disclose the author’s name and have him testify next week on the same day as Maxime Kahn, who unwound Kerviel’s unauthorized trades.
“I want to hear from this man,” Filippini said.
Kerviel, convicted in 2010 of breach of trust, forging documents and computer hacking in relation to a 4.9 billion-euro trading loss at Societe Generale, told the Paris court last week he’d heard of the conspiracy from a person who, he said, refused to testify in public. He’s appealing his conviction and sentence of three years in jail and repayment of the bank’s loss in full.
The letter was written by a Philippe Hoube, who works at brokerage Newedge Group SA, where Kerviel passed many of his orders, according to David Koubbi, Kerviel’s lead lawyer. A Newedge didn’t immediately respond to a call for comment.
‘Not Very Serious’
Filippini criticized the defense at a prior hearing for not providing evidence earlier and refused to allow anonymous testimony, calling the tactic “not very serious.” Today, she also challenged a claim by Kerviel’s lawyers that someone tampered with recordings of conversations made when Kerviel was called into the bank regarding the unwinding of his trades. She said Koubbi and his staff hadn’t listened to all 8 hours of the recordings “before pronouncing it tampered with.”
Over 20 hours of hearings last week, when the court reviewed Kerviel’s career at the bank, he posited that the bank saw the opportunity in 2007 to use unwinding his positions in January 2008 to minimize the threat of the collapsing subprime market.
“You’re writing your future film screenplay,” Francois Martineau, a lawyer for Societe Generale, said of the theory.
Daniel Bouton, Societe Generale’s then-chief executive officer and chairman, delayed announcing a 2.05 billion-euro write down linked to subprime by three days, to Jan. 24, 2008, after learning of Kerviel’s trades. His bets were unwound over three days as equity markets fell and news of the trading loss overshadowed the better-than-expected subprime report.
Witnesses, including Kerviel’s former superiors are scheduled to begin testifying this week. Bouton, who left the bank in 2009, is now scheduled to appear on June 25.
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