French rogue trader damages slashed to 1 million euros
Jerome Kerviel was sentenced to three years in prison for nearly bringing down the bank with the losses
A French court has cut the damages owed by former trader Jerome Kerviel from 4.9 billion euros ($5.5 billion) to a more manageable 1 million euros ($1.1 million).
The court near Paris ruled Friday that Kerviel was “partly responsible” for huge losses suffered in 2008 by the bank Societe Generale through his reckless financial trades.
But the court also ruled that the bank’s “deficiency” in its management controls and security systems contributed to the size of the losses, which Kerviel would have had no realistic way of repaying.
“I’m hoping to get to zero (civil damages) in the end because I still think I do not owe anything to Societe Generale. The battle continues”, Kerviel told reporters following the ruling, which is open to appeal. The case “used to be about 4.9 billion euros. It doesn’t exist anymore,” he said.
In one of the biggest ever trading fraud cases, Kerviel was sentenced to three years in prison for nearly bringing down the bank with the losses, just before the financial market meltdown in 2008.
The 39-year-old has been found guilty of forgery, breach of trust and fraudulent computer use for covering up bets worth 50 billion euros - more than the market value of the entire bank at the time.
In 2014, the Cour de cassation, French highest court, upheld Kerviel’s criminal conviction and three-year sentencing, but annulled the 4.9 billion-euro civil damages, saying they were “disproportionate” and that the bank had its share of responsibility in its own losses.
The initial amount of damages, which were equivalent to the total losses reported by the bank in the fraud, was so huge that Kerviel wouldn’t have been able to pay them anyway.
As a result, the top court ordered a new civil trial.
More court drama is expected in Kerviel’s legal saga, which has captured the national imagination. His lawyer is now trying to have his client’s criminal conviction overturned.
The battle is also about image and reputation, both for the bank and Kerviel, who has tried to portray himself as a victim of an improperly regulated banking sector and a crusader against the ills of the financial world.