Kerviel Loses Appeal on 4.9 Billion-Euro SocGen Trading Loss
By Heather Smith – Oct 24, 2012 8:14 AM ET
Jerome Kerviel lost his bid to reverse a 2010 guilty verdict finding him solely responsible forSociete Generale SA (GLE)’s 4.9 billion-euro ($6.34 billion) trading loss.
Judge Mireille Filippini today upheld the verdict finding Kerviel guilty of abusing the bank’s trust, faking documents and entering false data into computers. Kerviel argued that the bank knew he was exceeding his mandate and was using him as a scapegoat for subprime mortgage market losses.
The 2008 trading loss was one of the biggest in history, wiping out almost two years of pretax profit at Societe Generale’s investment-banking unit. Kerviel, 35, was called a “terrorist” by then-Chief Executive Officer Daniel Bouton, a comment he refused to apologize for during the June appeals hearings.
A Paris court rejected Jerome Kerviel’s appeal at a hearing today. Photographer: Balint Porneczi/Bloomberg
“It is clear that Societe Generale was a victim of these crimes which Jerome Kerviel was the sole conceiver,” Filippini said in her ruling today, which upheld a three-year prison sentence and an order for him to repay the bank. “Societe Generale is entitled to recover the full amount of the financial harm resulting from unwinding this position.”
Kerviel’s lawyer, David Koubbi, said after the ruling they would consider an appeal.
“We strongly defended Jerome Kerviel and despite the new elements that we brought forward, nothing changed their mind,” Koubbi said. “We will continue to defend him against what has been a great injustice.”
Jean Veil, a lawyer for the Paris-based bank, said Societe Generale is realistic about Kerviel’s ability to pay back the 4.9 billion euros.
“Societe Generale is ready to forget Jerome Kerviel, but I don’t think the damage he did to the bank and to its employees can easily be forgotten,” Veil said.
Kerviel’s story — a native of Brittany, who rose through the ranks to Societe Generale’s trading floor without having attended any of France’s elite schools — made him a cult hero in the aftermath of the 2008 loss, with a comic book, fan clubs and t-shirts supporting him. A poll soon after the story broke showed 77 percent of French respondents saw him as a “victim.”
He told the appeals court that he left his job at a computer consultancy last year to focus on his appeal.
Kerviel changed defense teams and pursued an aggressive strategy on appeal, filing criminal complaints against the bank in the weeks before the hearings began. During the appeal, his lawyers argued that the bank allowed him to make unauthorized trades to mask the danger it faced from the U.S. subprime mortgage market.
Societe Generale retaliated with defamation claims and Filippini openly clashed with Koubbi, threatening at one point to refer him to the bar association over his treatment of witnesses.
The prosecution rejected Kerviel’s arguments and asked Filippini to increase his sentence to the maximum five years, from the three years he received in 2010.
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To contact the editor responsible for this story: Anthony Aarons at email@example.com