French rogue trader appeals five-billion-euro conviction

1st June 2012, Comments 0 comments

Rogue trader Jerome Kerviel's appeals trial begins Monday against a 2010 conviction for wild gambles that led to losses of five billion euros and almost brought down one of France's biggest banks.

The original verdict included a demand he pay back the staggering 4.9 billion euros ($6.0 billion) his market gambles cost Societe Generale, a ruling many felt turned him into a scapegoat for a banking system based on pure greed.

The 35-year-old from a small town in Brittany was also 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.

His actions almost destroyed Societe Generale just months before the subprime crisis but Kerviel has always argued that his superiors knew what he was doing and turned a blind eye as long as he was turning a profit.

He has publicly rejected charges that he acted alone, claiming the firm knew all about his $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 they knew nothing of what Kerviel was up to, while the banker, who changed lawyer two months ago, says he refuses to shoulder the spectacular losses and "pay for everyone."

New lawyer David Koubbi, who represented writer Tristane Banon in her unsuccessful attempted rape suit against disgraced former IMF chief Dominique Strauss-Kahn, 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 slander suits.

Since the Kerviel case exploded, banks have insisted that internal safeguards have been reinforced to prevent a repeat.

Societe Generale was fined four million euros at the time by the banking commission for failing in its internal checks but fresh trading scandals continue to erupt.

In 2011 a London-based trader was charged with fraud after losing Swiss bank UBS $2.25 billion, while US bank JPMorgan is recovering from more than $2 billion in derivatives trading losses,

Those losses were blamed on another French trader, Bruno Michel Iksil, nicknamed the "London Whale" and "Voldemort" -- after Harry Potter's evil nemesis.

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

The trial is set to last until June 28.


© 2012 AFP

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