Not many people expected him to be found totally blameless, but Jérôme Kerviel’s verdict yesterday astonished even the most buttoned-up bourgeoisie of Paris’ finance-centered 8th arrondissement.
A French judge found Kerviel, Société Générale’s infamous « rogue trader » who manipulated €50 billion worth of false trades which almost brought about the French bank’s demise, solely responsible for the damages incurred by the bank. Kerviel was thus convicted on all counts of breach of trust, forgery and unauthorized use of computer systems. The court sentenced him to three years in prison and ordered him to repay €4.9 billion in restitution to the bank
As a brilliant local expert I know, Christopher Mesnooh, explained to the NY Times about the verdict, “It really does hold him solely responsible, which is probably the most debatable part of the decision. The message from the court is that Société Générale — a leading jewel of the French banking sector — did not act irresponsibly, but was the victim of a rogue trader.”
Given the evidence indicating that Société Générale had failed to follow through on at least 74 internal alerts about Mr. Kerviel’s trading activities dating back to mid-2006, the suggestion by numerous French politicians that the bank shares some responsibility is not surprising.
Something tells me there’s a fiscal angle to this that I haven’t fully grasped. If the bank were found partially responsible, what would the fiscal impact be of the billions in profits redeemed by the bank during Kerviel’s initial period of trading manipulation ? Or on the € 4.9 billion loss in January 2008 at the end of the adventure ?
In the French press today, Société Générale benevolently profferred that it will not pursue Kerviel for the full € 4.9 billion in monetary compensation. Perhaps they’ll restrain themselves to a mere 1 or 2 billion.
Hey, perhaps they could use the money to reinforce their internal controls…