Trader found guilty of massive fraud is told to repay US$6.7b
Source: Agencies |
October 6, 2010, Wednesday
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Print Edition
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FORMER Societe Generale SA trader Jerome Kerviel was convicted on all counts yesterday in one of history's biggest trading frauds, sentenced to three years in jail and ordered to pay the bank a mind-numbing 4.9 billion euros (US$6.7 billion) in damages.
The ruling marked a huge victory for Societe Generale, one of France's most blue-blooded 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 unauthorized computer use for covering up bets worth nearly 50 billion euros 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 that it lost unwinding his complex positions in January 2008 - a punishment he would almost certainly be unable to pay. That sum marked the largest-ever alleged fraud by a single trader.
There were gasps and surprised looks when presiding judge Dominique Pauthe read out the damages to a packed courtroom.
Outside the courtroom, defense lawyer Olivier Metzner called the financial penalty "unbelievable."
"I have the feeling Jerome Kerviel is paying for an entire system," said Metzner, noting that his client hadn't benefited financially from the fraud.
Metzner said Kerviel would appeal and will remain free pending that.
Damages are also suspended pending any appeal, so Kerviel wouldn't be ordered to pay right away.
French media calculated that based on his current salary of 2,300 euros a month as a computer consultant, it would take Kerviel 177,536 years to pay off the damages.
While trading for the bank, Kerviel took home a salary and bonus of less than 100,000 euros - a relatively modest sum in the financial world.
Societe Generale spokeswoman Caroline Guillaumin called the verdict "an important ruling that acknowledges the moral and financial harm done to the bank and its staff."
During proceedings, both sides admitted to mistakes but Kerviel insisted his superiors knew what he was doing.
Societe Generale's former chairman acknowledged there were problems in monitoring the trader's work.
In the ruling, the court said that Kerviel had acted without the bank's knowledge.
The bank's CEO Daniel Bouton and its head of investment banking Jean-Pierre Mustier stepped down in the wake of the scandal.
The ruling marked a huge victory for Societe Generale, one of France's most blue-blooded 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 unauthorized computer use for covering up bets worth nearly 50 billion euros 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 that it lost unwinding his complex positions in January 2008 - a punishment he would almost certainly be unable to pay. That sum marked the largest-ever alleged fraud by a single trader.
There were gasps and surprised looks when presiding judge Dominique Pauthe read out the damages to a packed courtroom.
Outside the courtroom, defense lawyer Olivier Metzner called the financial penalty "unbelievable."
"I have the feeling Jerome Kerviel is paying for an entire system," said Metzner, noting that his client hadn't benefited financially from the fraud.
Metzner said Kerviel would appeal and will remain free pending that.
Damages are also suspended pending any appeal, so Kerviel wouldn't be ordered to pay right away.
French media calculated that based on his current salary of 2,300 euros a month as a computer consultant, it would take Kerviel 177,536 years to pay off the damages.
While trading for the bank, Kerviel took home a salary and bonus of less than 100,000 euros - a relatively modest sum in the financial world.
Societe Generale spokeswoman Caroline Guillaumin called the verdict "an important ruling that acknowledges the moral and financial harm done to the bank and its staff."
During proceedings, both sides admitted to mistakes but Kerviel insisted his superiors knew what he was doing.
Societe Generale's former chairman acknowledged there were problems in monitoring the trader's work.
In the ruling, the court said that Kerviel had acted without the bank's knowledge.
The bank's CEO Daniel Bouton and its head of investment banking Jean-Pierre Mustier stepped down in the wake of the scandal.
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