French rogue trader heads for jail as court rejects appeal

PARIS - Agence France-Presse

Former Societe Generale trader Jerome Kerviel arrives at the Paris court for the verdict in his appeal trial October 24, 2012. REUTERS Photo

A Paris court on Wednesday rejected an appeal by Jerome Kerviel against a three-year jail term and a 4.9-billion-euro ($6.3-billion) fine he got for his part in France's biggest rogue-trading scandal.
 
The court upheld the five-year jail sentence handed down in 2010, two years of which were suspended, and confirmed Kerviel had to pay back the billions his gambles cost Societe Generale bank, which was brought to the brink of collapse by the fraud.
 
Kerviel sat stony-faced in a dark suit and black tie as the ruling was read out. The court did not order him to begin his sentence immediately and he left quickly without making any comment to the media scrum outside the courtroom.
 
His lawyer, David Koubbi, condemned what he called a "lamentable injustice" and said he may appeal to a higher court.

Societe Generale welcomed the ruling. Its lawyer Jean Veil said it showed "the full and entire guilt of Mr Jerome Kerviel", but he added that the bank would be "realistic" as regards getting its lost money back.
 
The sum is equivalent to what Kerviel -- currently unemployed -- might earn over 370,000 years if he started working for the French minimum wage.
 
Lawyers for the 35-year-old Kerviel had argued at his appeal hearing in June that he should be acquitted. Denouncing his conviction as a "farce", they insisted the bank knew he was making uncovered bets on futures markets.
 
But prosecutor Dominique Gaillardot urged the court to make an example of Kerviel, describing him as "perverse and manipulative".
 
Calling for a maximum five-year term, he argued: "Your decision will be an example and a deterrent." Kerviel himself argued during the appeal that he was not responsible for the huge losses, having acted with the knowledge of his superiors. They had turned a blind eye as long as he was making a profit, he said.
 
A small-town boy from Brittany, the trader insisted that he was a scapegoat and that Societe Generale had to take responsibility for his gambles.
 
He did not profit personally from his unauthorised 50 billion euros of uncovered bets on futures markets in 2007 and 2008.
 
Convicted in October 2010 for breach of trust, forgery and entering false data into computers during the covert stock market deals, Kerviel has remained free pending the result of his appeal.

He changed his lawyer in March this year, hiring Koubbi, who accused the bank of manipulating secret recordings to make it appear that the trader's superiors were unaware of his activities.
 
The lawyer had also argued that while Kerviel was ordered to repay the money he lost, the firm had already recovered a third of the sum in the form of a tax write-off.
 
French regulators fined Societe Generale four million euros for its slack oversight and the case cost a number of senior executives at the bank their jobs. Only Kerviel was prosecuted,however.

Since then, banks have tried to reinforce internal safeguards to prevent a repeat of such a crisis. 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.

And in July, US bank JP Morgan said losses blamed on one of its London trading units came to $5.8 billion -- nearly triple the original estimate.
 
Those losses were blamed on another French trader, Bruno Michel Iksil, nicknamed the "London Whale" and "Voldemort", after fictional boy wizard Harry Potter's evil nemesis.