French rogue trader Kerviel launches appeal
PARIS, June 4 – Ex-trader Jerome Kerviel arrived in court today to appeal against a three-year prison sentence for his role in France’s biggest-ever rogue trading scandal, which cost French bank Societe Generale US$6.1 billion (RM19.54 billion).
Armed with a new counsel – media-savvy David Koubbi – Kerviel (picture) has already gone on the offensive ahead of his month-long appeal, filing two lawsuits accusing SocGen of obtaining a verdict under false pretences and of tampering with evidence.
The fresh allegations, which SocGen has denied and has responded to with countersuits for defamation, seek to shift focus back on to the bank by accusing it of concealing information – such as its tax write-off of Kerviel-related losses – and of responsibility for alleged “blanks” on tapes used as evidence.
Wearing an open-necked white shirt for his court appearance and showing little emotion, Kerviel sat silently during introductory remarks by magistrates as he seeks to fight the 2010 conviction that held him responsible for massive, risky bets uncovered in 2008.
The 35-year-old trader does not deny he covered up the positions he held, but claims his superiors knew what he was doing. SocGen, for its part, denies any part in the trades.
“I am not responsible for this loss ... I always behaved according to rules set by my superiors,” Kerviel said in court in Paris.
The reappearance of Kerviel is the latest reminder of the potential costs to banks of risky trading activity, coming after JPMorgan recently announced its own US$2 billion trading loss – events which have encouraged regulators on both sides of the Atlantic to cast a sharp eye on bank practises.
The other shadow looming over the sector is political. With France’s new Socialist government threatening to separate banks’ risky activities from their retail operations, French banks have been insisting they do not do overly risky proprietary trading.
At stake for SocGen in particular is whether magistrates will once again exonerate the bank from any responsibility for Kerviel’s massive trading positions, which dealt a big blow to its reputation and forced it to raise capital.
The Kerviel appeal may end up strengthening the view that regardless of whether trades are for clients or for the banks themselves, there needs to be tougher regulation and more protection for consumers, analyst Christophe Nijdam at equity research firm Alphavalue said.
“This case offers more grist for the new president’s mill,” he said. “If it’s not possible to protect a bank from this kind of trading fraud, it becomes even more urgent to separate this activity from retail banking.” – Reuters