French rogue trader Jerome Kerviel gets three years in prison

[News_Editor]

French rogue trader Jerome Kerviel gets three years in prisonâ

2010-10-05 22:17:09 GMT+7 (ICT)

PARIS (BNO NEWS) -- A former trader for Société Générale, one of Europe's leading financial services company, has been sentenced to 36 months in prison and ordered to repay the company 4.9 billion euros ($6.8 billion) for threatening the bank's stability.

Jerome Kerviel, 33, had in January 2008 roughly 50 billion euros in unauthorized open positions in his trading book, which resulted in the bank's loss of 4.9 billion euros (around $7 billion at the time). Kerviel's rogue trades represented a risk to the bank larger than its own market value, almost collapsing the financial institution.

Société Générale conducted a routine check on January 18, 2008, which revealed Kerviel's trades that also represented the largest ever attributed to a single trader.

Despite Kerviel admitting to have hid his trading activities by falsifying paperwork and entering fake trades, he claimed his bosses were aware of his transactions and were even encouraging him to go forward with the trades if they were profitable. Witnesses denied these claims, however.

"My objective was to help [the bank] make money," Kerviel said during the trial. " someone who tried to do his job the best he could, in the interests of the bank," he added, saying that unauthorized positions and hiding them were a common practice at the company.

"The lack of vigilance by the bank in monitoring the only existing limits, acting as alert signs, hardly exempted Jerome Kerviel from his duty to inform his hierarchy of the reality of his excesses or to come back within the limits imposed," Judge Pauthe said.

"By his deliberate actions, he put in peril the existence of the bank that employed 140,000 people, of which he was part, and whose future he mortgaged," Pauthe added.

"This judgement is totally unreasonable," Olivier Metzner, Kerviel's lawyer said. "It suggests that the bank is not responsible for anything, that no system of control could have prevented this."

Kerviel received a five-year sentence with two suspended, and was ordered to pay 4.9 billion euros for breach of trust, forgery and unauthorized use of computers.

Metzner said they were going to eject an appeal against the ruling. Kerviel will be able to remain free during the appeal, which could last several months.

-- © BNO News All rights reserved 2010-10-05