Paris, Oct 5 (DPA) A Paris court Tuesday found rogue trader Jerome Kerviel guilty of several charges, including breach of trust, and sentenced him to five years in prison, two of them suspended.
In January 2008, Kerviel’s employer, the bank Societe Generale, found that Kerviel had made a series of unauthorized derivatives trades resulting in open positions of some 50 billion euros (currently $68.5 billion).
Unwinding those positions eventually cost the bank 4.9 billion euros. That is the precise sum of money the court demanded that Kerviel – who was also found guilty of forgery and unauthorized use of a computer – pay the bank in damage and interest.
Although viewed as an isolated case at the time, the affair turned into a harbinger for the risks and excesses of large financial institutions that resulted in the global financial crisis.
During the trial, the now 33-year-old Kerviel admitted he had falsified documents and used fake trades to hide his real activities.
But he had claimed that his bosses at Societe Generale knew what he was doing and either ignored or encouraged him as long as he was making money.
‘I didn’t invent these techniques; others did it, too,’ Kerviel said. ‘These practices were known and acknowledged by management.’
However, Societe Generale management repeatedly denied these allegations.
Former bank president Daniel Bouton, who once called Kerviel a ‘terrorist’, said in court: ‘Societe Generale did not see, Jerome Kerviel’s supervisors did not see. Because before Jerome Kerviel there was no principle of distrust at Societe Generale.’
The court agreed with the bank. In the judgment, head magistrate Dominique Pauthe ruled that Societe Generale ‘had no knowledge of the fraudulent activities of Jerome Kerviel’.
It is almost certain that Kerviel will appeal the verdict, which was far harsher than had been expected, leading to another trial.
