French trader Kerviel to stand trial

1st September 2009, Comments 0 comments

Rogue trader Kerviel is to stand trial over EUR 5 bln trading scandal at Societe General facing charges on breaching trust, falsifying and use of fake documents and tampering with computer information.

Paris – French trader Jerome Kerviel is to stand trial over the massive nearly EUR five-billion trading scandal at Societe Generale in 2008, sources close to the case said Monday.

Investigating magistrates Renaud van Ruymbeke and Francoise Desset ordered Kerviel to answer charges of breach of trust among others before the Paris criminal court.

No date has been set for the trial, which is not expected to begin before the end of the year at the earliest.

One of France's three biggest banks, Societe Generale shocked the financial world when it unveiled losses of EUR 4.9 billion in January 2008.

The losses were incurred when the bank was forced to unwind more than EUR 50 billion of unauthorised deals Kerviel is said to have made.

The bank has said Kerviel was a rogue trader who went to great lengths to conceal his dealings.

The 32-year-old has countered that his managers knew of his actions and kept silent as long as he was making good returns.

"Do you honestly believe a 15-billion-euro operation could go unnoticed and that the bank would ask no questions?" he previously told RTL radio.

"For my part, I wasn't hiding myself. I was at the middle of the desk and everyone could see me work."

But the investigating magistrates rejected defence requests in 2008 for an additional probe to establish whether the bank turned a blind eye to his actions.

Kerviel also faces charges of falsifying and use of fake documents and tampering with computer information, according to the sources.

He faces a possible sentence of five years in prison and EUR 375,000 fine if convicted.

Kerviel's assistant Thomas Mougard who faced charges of complicity has however been cleared and will not stand trial, the sources added.

Jean Veil, a lawyer for the bank who could not confirm late Monday Kerviel's trial, told AFP that "if this information is correct, the argument of Societe Generale has been confirmed in all its details by the two investigating magistrates – the trust of his superiors was abused and Kerviel was acting alone."

Societe Generale was fined EUR four million by France's banking regulator in July 2008 for "grave deficiencies" in its internal controls that allowed the situation to go undetected for so long.

The banking commission also issued a formal warning to the lender for failing to prevent the losses. Five bank employees were fired and two others resigned over the affair.

Societe Generale's then chairman Daniel Boutin described Kerviel as a "terrorist and fraudster" who had betrayed the confidence of his managers.

Described by workmates as a quiet, unassuming trader, Kerviel turned himself in to police on 26 January 2008, two days after the bank revealed the losses.

AFP / Expatica

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