Kerviel jailed over trading scandal

 
City A.M. Reporter
Former Societe Generale trader Jerome Kerviel was sentenced to five years in prison by a Paris court for his role in a trading scandal and ordered to reimburse the French bank 4.9 billion euros (£4.2bn).

The 33-year-old, sitting in a dark suit and tie and staring at the floor with his arms folded, was ordered to stand to hear he had been found guilty of breach of trust, computer abuse and forgery.

The judges said Kerviel had not been given even tacit authorisation from his bosses to speculate excessively and that SocGen's own shortcomings did not exonerate him from his duties as a professional trader.

They also said Kerviel knew exactly what he was doing in overstepping his remit as a trader and that he sought to hide his trading positions.

"Kerviel knowingly went beyond his remit as a trader," presiding judge Dominique Pauthe told the court. Kerviel was ordered to spend three years in prison, with the remaining two suspended. The public prosecutor had recommended Kerviel serve at least four years behind bars, with a fifth year suspended.

Kerviel's lawyer Olivier Metzner told journalists he would appeal the decision which he added was "senseless" and the prison sentence was "extraordinary."

Tuesday's verdict draws a line in the sand for SocGen, which has worked hard to clean up its image and tighten risk controls since the scandal broke in 2008.

The bank had maintained Kerviel acted alone and egregiously in taking unauthorised positions worth 50 billion euros that cost 4.9 billion to unwind.

Kerviel did not deny he took risky bets and lied to cover them up but claimed his superiors knew what he was doing. During his three-week trial in June his lawyers cast him as an innocent pawn, corrupted and goaded by a bank that was hooked on risk.

"The accident we had has made us more aware... I think the bank will move on after today," said Alberto Valenzuela, Deputy CEO of Societe Generale Private Banking (Suisse) SA and Global Market Manager for Latin America.