Rogue trader Jerome Kerviel on trial over £4 billion loss

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At Paris’s Palais de Justice, he will face charges of breach of trust,
computer abuse and forgery. If found guilty he could be jailed for up to
five years and fined €375,000.

Yet the 33-year-old is not the only one on trial. In France, Mr Kerviel’s
spectacular rise and public fall epitomises what is seen as wrong with the
freewheeling banking sector, which French public opinion has long held as an
Anglo-Saxon imposition.

Apparently mindful of this, Mr Kerviel has tapped into the moral zeitgeist of
the post-sub-prime crisis. In a book released just two weeks before the
hearing, he claims the bank knew what he was doing, and paints himself as a
minor pawn in a worldwide frenzy of greed.

“At the heart of the great banking orgy, traders are only given the same
consideration as any street prostitute,” he writes in The Spiral:
Memories of a Trader.

“A quick thank you for a good day’s takings, a good hooker.”

Like British trader Nick Leeson, whose losses brought down Barings, London’s
oldest merchant bank, in 1995, Mr Kerviel gained international notoriety in
January 2008 when Société Générale, known as SocGen, revealed massive
trading losses.

The bank claims Mr Kerviel made unauthorised and highly speculative deals
running to billions of euros – far exceeding his trading limits – and
covered up the massive sums involved with fictitious deals.

While Mr Kerviel admits he took “excessive risks”, he claims the bank not only
knew what he was doing, but supported him while he was making them money,
only turning him into a scapegoat when the deals became public.

“I was wrong and committed errors, faults even, but I was serious and
efficient at work and the fact my bosses protected me and I was promoted
during my short career shows this,” he writes in his book.

The hearing, expected to last three weeks, will also reveal the extent to
which giant French banks were involved in similarly risky financial
practices to those in Britain and America.

Although it has denied any knowledge of or complicity in Mr Kerviel’s dealing,
SocGen was given a record fine by the French banking regulator for failures
in its controls.

Mr Kerviel’s book reveals how he had long been fascinated by maths and high
finance, ever since his childhood in the Breton town of Pont-l’Abbé. He
studied economics at college and in 2000 joined SocGen, starting as a
backroom assistant in the compliance department before moving onto the
trading floor.

He also insists that he was devoted to his job, sacrificing his personal life
for 15-hour days in the trading room.

“We [traders] had become a part of the Société Générale: we lived through her
and for her,” he writes.

In 2007, he claims to have earned the bank €1.5 billion (£1.25 billion), most
of which was made through speculative deals that he claims were not
officially allowed by SocGen, but tolerated as long as they turned a profit.

But in January 2008, his web of hidden deals began to unravel when SocGen
discovered he was trading around €50 billion (£42 billion) – roughly 25 per
cent more than the bank’s market value.

Bank officials hauled him in for questioning and a week later he was arrested.
Subsequent investigations showed that his knowledge of back-office computer
functions had enabled him to conceal some of his bets by offsetting deals
with fictional counter-parties, leading Christian Noyer, the Bank of France
governor, to describe him as being a “genius of fraud”.

SocGen points out that magistrates have already dismissed his claims of
complicity from his superiors.

Mr Kerviel now works as a computer consultant earning £26,000 a year.

His lawyer, Olivier Metzner, told The Sunday Telegraph that his client
was confident about the trial and has new evidence. In his book, Mr Kerviel
claims his trial will reveal the global mire in which dealing rooms wallow.

“Anything is allowed to get good results,” he writes.

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