Rogue trader appeals 5-billion-euro conviction


PARIS, AFP

PARIS — Rogue trader Jerome Kerviel begins his trial on appeal Monday against a 2010 conviction for wild gambles that lost one of France’s biggest banks 5 billion euros, almost destroying it in the process. The 35-year-old from a small town in Brittany was sentenced to five years in jail with two years suspended for breach of trust, forgery and entering false data into computers during the 2008 covert stock market deals. The original verdict also required him to pay back the staggering 4.9 billion euros (US$6 billion) his market gambles cost Societe Generale. But for the critics, that ruling made him a scapegoat for a banking system based on pure greed. His actions almost destroyed Societe Generale just months before the subprime crisis. But Kerviel argued that his superiors knew what he was doing and had turned a blind eye as long as he was making them a profit. Rejecting charges that he acted alone, he insisted the firm knew all about his US$50 billion in trading positions, and even encouraged him to take risks. Kerviel admits regularly exceeding trading limits and logging false transactions to cover his gambles, but says this was common practice. Societe Generale management has argued it knew nothing of what Kerviel was up to. Two months ago, Kerviel changed his lawyer, hiring David Koubbi, who has launched two countersuits against Societe Generale. One accuses the bank of allegedly manipulating secret recordings to make it appear that the trader’s superiors were unaware of his activities. The other says that while Kerviel was ordered to repay the 4.9 billion euros he lost, the firm has already been repaid a third of that sum in the form of a tax write-off — paid for by the taxpayer. Societe Generale, which said in 2010 that it would spare Kerviel paying the full compensation, has hit back with two suits for malicious falsehood. Since the Kerviel case exploded, banks have insisted that internal safeguards have been reinforced to prevent a repeat. Societe Generale was fined 4 million euros at the time by the banking commission for failing in its internal checks

If convicted on appeal, Kerviel faces up to five years in prison and a fine of 375,000 euros.