Saturday 16 December 2017

Damages owed by rogue trader Kerviel slashed from €4.9bn to just €1m

Former trader Jerome Kerviel stands outside the courthouse in Versailles. Photo: REUTERS/Charles Platiau
Former trader Jerome Kerviel stands outside the courthouse in Versailles. Photo: REUTERS/Charles Platiau

Philippe Sotto, in Versailles

A FRENCH court has cut the civil damages owed by former trader Jerome Kerviel from €4.9bn to €1m.

The court in Versailles, outside Paris, ruled that Kerviel was "partly responsible" for huge losses suffered in 2008 by the bank Societe Generale through his reckless financial trades.

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 was found guilty of forgery, breach of trust and fraudulent computer use for covering up bets worth €50bn - more than the market value of the entire bank at the time.

The court 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," he told reporters after the ruling, which is open to appeal.

The case "used to be about 4.9 billion euros. It doesn't exist any more", he said.

In 2014, the Cour de Cassation, French highest court, upheld Kerviel's criminal conviction and three-year sentence, 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 would not have been able to pay them.

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 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.

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