Societe Generale rogue trader Jerome Kerviel sees fine slashed by French court

French judges have said Jerome Kerviel must pay Societe Generale €1m, a fraction of the initial €4.9bn trading loss he caused the French bank more than eight years ago.

Societe Generale’s “multiple faults” mean the bank “had a major and decisive role” in allowing the incident, one of the most famous cases of rogue trading in financial history, according to a three-judge panel in Versailles.

The 39-year-old former trader — seen as a folk hero by some — has been trying for years to shift blame for the loss onto France’s second-largest bank. 

While a 2014 criminal verdict found him solely responsible for the loss, an order requiring him to repay the bank was overturned at the same time.

“Whatever the craftiness and determination of the one who committed the acts, or even the sophistication of the methods deployed, such a great damage would never have been reached without the patchy nature of Societe Generale’s control systems, which created a high degree of vulnerability,” according to the 29-page ruling.

The Paris-based firm declined to immediately comment on the verdict, which bank attorney Jean Veil called “satisfactory”. He said it was an “intelligent, serene decision that can be understood by the French people”.

Mr Kerviel’s lawyer, David Koubbi, said the ruling should put the public focus on the bank’s actions instead of those of his client. Societe Generale got a €2.2bn tax break from French authorities because of the trading loss.

“Today Societe Generale should get its checkbook out and sign a €2.2bn cheque” to the French state, he said.

“The climax of this trial and this ruling is the absolute necessity of paying back the €2.2bn of public money.”

Mr Kerviel had amassed €50bn in positions in European stock futures using fake hedges and false documents. The French bank unwound the positions during three days in January 2008 after uncovering his unauthorised trades.

Mr Kerviel’s lawyers have asked for a new independent estimate of the loss.

“It seems a more rational decision than in the past,” said Eric Vernier, a researcher specialising on tax and finance at the French Institute for International and Strategic Affairs.

“It’s logical to recognise a fault on Mr Kerviel’s side and to punish it”, but it is also “highly unlikely” that the bank’s control systems didn’t detect his actions for such a long period, he said.

Bloomberg


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