French rogue trader heads for jail as court rejects appeal

Annie Thomas

A French court has rejected an appeal by rogue trader Jerome Kerviel, seen here in June 2012, against the three-year jail term and 4.9 billion euro fine he got in a fraud case that nearly ruined Societe Generale bank.

A French court on Wednesday rejected an appeal by rogue trader Jerome Kerviel against the jail term and 4.9 billion euro ($6.3 billion) fine he was given in a fraud case that nearly ruined Societe Generale bank.

The Paris court upheld the five-year jail sentence handed down in 2010, two years of which were suspended, and confirmed that Kerviel had to pay back the billions his gambles cost the bank.

Kerviel sat stony-faced in a dark suit and black tie as the ruling was read out. The court did not order him to begin his sentence immediately and he left quickly without making any comment to the media scrum outside the courtroom.

His lawyer David Koubbi, who represented a French writer in her unsuccessful attempted rape case against ex-IMF boss Dominique Strauss-Kahn, condemned what he called a "lamentable injustice" and said he may appeal to a higher court.

Lawyers for the 35-year-old Kerviel, now unemployed, had argued at his appeal in June that he should be acquitted. Denouncing his conviction as a "farce", they insisted the bank knew he was making uncovered bets on futures markets.

But prosecutor Dominique Gaillardot urged the court to make an example of Kerviel, describing him as "perverse and manipulative".

Calling for a maximum five-year term, he argued: "Your decision will be an example and a deterrent."

Kerviel himself argued during the appeal that he was not responsible for the huge losses, having acted with the knowledge of his superiors. They had turned a blind eye as long as he was making a profit, he said.

A small-town boy from Brittany, the trader insisted that he was a scapegoat and that Societe Generale had to take responsibility for his gambles.

He did not profit personally from his unauthorised 50 billion euros of uncovered bets on futures markets.

Convicted in October 2010 for breach of trust, forgery and entering false data into computers during the covert stock market deals, Kerviel had remained free, pending the result of his appeal.

He changed his lawyer in March this year, hiring Koubbi, who launched two countersuits against the bank. One accused it of manipulating secret recordings to make it appear that the trader's superiors were unaware of his activities.

The other said that while Kerviel was ordered to repay the money he lost, the firm had already recovered a third of the sum in the form of a tax write-off.

The bank has hit back with two suits for malicious falsehood.

Societe Generale said in 2010 that it would spare Kerviel from paying the full compensation: there was in any case no way he could have found the money.

French regulators fined Societe Generale four million euros for its slack oversight and the case cost a number of senior executives at the bank their jobs. Only Kerviel however was prosecuted.

Since then, banks have tried to reinforce internal safeguards to prevent a repeat of such a crisis: but fresh trading scandals continue to erupt.

In 2011 a London-based trader was charged with fraud after losing Swiss bank UBS $2.25 billion.

And in July, US bank JPMorgan says losses blamed on one of its London trading units, came to $5.8 billion -- nearly triple the original estimate.

Those losses were blamed on another French trader, Bruno Michel Iksil, nicknamed the "London Whale" and "Voldemort" -- after fictional boy wizard Harry Potter's evil nemesis.

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