Court throws out Kerviel’s SocGen appeal

Pour lire cet article en français s’il vous plaît cliquez ici

Reported by:  Darius Champion and Gregory P. Bufithis

24 October 2012 –  Jérôme Kerviel’s attempt to overturn a prison sentence was thrown out of court today after a Paris judge rejected the former Société Générale trader’s appeal.  Mireille Filippini, the Paris court judge, upheld the rogue trader’s 2010 five-year sentence — three years in prison and two suspended — and ordered him to repay SocGen the €4.9bn of losses incurred by his risky bets.

We had covered the case extensively because it had a multitude of e-discovery and compliance issues [ click here ].

Judge Filippini rejected Mr Kerviel’s appellate argument that SocGen knew about his €50bn of open bets made in 2008 and tried to use them to mask subprime losses.  “It is clear that Société Générale was a victim of these crimes which Jérôme Kerviel was the sole conceiver,” according to the judge’s ruling. “Société Générale is entitled to recover the full amount of the financial harm resulting from unwinding this position.”  However, the judge stopped short of increasing his sentence – as demanded by the state prosecution. Nor was he ordered to prison directly.

Kerviel, speaking to RTL Radio a few hours after the verdict, said: “I am completely crushed. I don’t understand the decision, I will take it to the [Cours de] Cassation” in reference to France’s highest court.

Jean Veil, SocGen’s lawyer, said the verdict was “a great satisfaction.” SocGen said it “clearly establishes that his fraudulent activities were committed without the bank’s knowledge”.

However, David Koubbi, Kerviel’s lawyer, called the decision “a lamentable injustice”.  He described the order to repay €4.9bn as a “lifetime death sentence”.

“Société Générale is not mad,” said Veil. While it would be “indecent” for Mr Kerviel to make money from the fraud – such as books or film deals – Mr Veil said he would negotiate with Mr Kerviel’s lawyers an agreement enabling the former trader “to have a normal life while respecting the court’s decision”.

Kerviel was found guilty of abuse of trust, forgery and computer abuse. He had acknowledged grounds for computer abuse at his first trial.  He admitted faking documents to disguise his trades and to having been caught up in “a spiral”. But he argued that his hierarchy turned a blind eye to his trades while they were profitable. “I am taking my share of responsibility, but I will not be the scapegoat for Société Générale,” he had said previously.