France - Three years for Societe Generale trader Jerome Kerviel
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(5 Oct 2010)
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France - Three years for guilty Societe Generale trader ADDS more reax
AP TELEVISION
Paris - 5 Oct 2010
1. Wide tilt-down exterior of Palais de Justice
2. Former index futures trader at Societe Generale SA, Jerome Kerviel (dark hair), and his lawyer Olivier Metzner (wearing glasses) arriving at court
STORYLINE:
On October 5th 2010 a Paris court sentenced former Societe Generale SA trader Jerome Kerviel to three years in prison and ordered him to pay the bank the enormous sum of 4.9 (b) billion euros (6.7 billion US dollars) for his role in one of history's biggest trading frauds.
The ruling marked a huge victory for Societe Generale, one of France's oldest and most prestigious banks, which has worked to clean up its image and put in place tougher risk controls since the scandal broke in 2008.
The 33-year-old former futures index trader stood expressionless as the court convicted him of all charges and pronounced a five-year sentence with two years suspended.
Kerviel was found guilty on charges of forgery, breach of trust and unauthorised computer use for covering up bets worth nearly 50 (b) billion euros (69 billion US dollars) between late 2007 and early 2008.
In a stunning blow, the court also ordered Kerviel to pay the bank back the 4.9 billion euros (6.7 billion US dollars) that it lost unwinding his complex positions in January 2008 - a symbolic punishment as he would almost certainly be unable to pay.
While trading for the bank, he took home a salary and bonus of less than 100,000 euros, or about 155,700 US dollars - a relatively modest sum in the financial world.
Defence lawyer Olivier Metzner said Kerviel would appeal.
"It is an absolutely unreasonable verdict which says that a bank is responsible for nothing, that it is not responsible for a creature it has made, that only Jerome Kerviel is responsible for the excess, of the crisis of a banking system," Metzner said.
Kerviel will remain free pending the appeal.
Kerviel has garnered considerable public appeal in France for his image of being a scapegoat for powerful corporate interests.
Kerviel maintained that the bank and his bosses tolerated his massive risk-taking as long as it made money, which he did at first.
During the proceedings, both sides admitted to mistakes but Kerviel insisted his bank superiors knew what he was doing.
Societe Generale's former chairman acknowledged there were problems in monitoring the trader's work.
The bank says Kerviel made bets of up to 50 (b) billion euros (69 billion US dollars) - more than the bank's total market value - on futures contracts on three European equity indices, though his net position appeared unremarkable because he balanced his real trades with fictitious transactions.
"The court understood that Societe Generale had no knowledge of the fraud elaborated by Jerome Kerviel and that it was a complete stranger to the lies, the systems and the falsifications and everything created by Jerome Kerviel to abuse the Soc Gen," Societe Generale's lawyer, Jean Veil, told reporters after the verdict.
The bank says his actions cost it 4.9 (b) billion euros (6.7 billion US dollars).
Still, an internal report by the bank found managers failed to follow up on 74 different alarms about Kerviel's activities.
Employed by Societe Generale 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' La Sante prison.
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AP Archive | G05488 | 6b86e6d07065ea1bb976327d443f72eb | Instant Library Oct-Dec 2010 | France | Paris | Western Europe |
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