Rogue Trader Jerome Kerviel Returns to Court over SocGen Damages

Jerome Kerviel has appeared in court again to decide how much he should have to pay Societe Generale in damages.

French rogue trader Jerome Kerviel returned to court earlier this week after an employment tribunal unexpectedly ordered Societe General to pay him over €400,000 in compensation for unfair dismissal.

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€50 Billion Hidden Trades

Kerviel was originally given a 3 year prison sentence in 2010 after accumulating €50 billion in hidden trades prior to the financial crisis. The positions cost SocGen €4.9 billion to unwind and nearly caused the French bank to collapse. Kerviel was also ordered to repay the money lost by the bank which he said at the time was like a lifetime death-sentence.

Kerviel said that the bank knew about and tacitly condoned his trading and argued that as a result the losses were not his fault but SocGen’s.

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Following several appeals by Kerviel, France’s highest court upheld an original court decision in 2014, finding him solely criminally responsible for the losses.

Oversight Failures

However, the judge said the lower courts had not fully taken into account the possible oversight failures by SocGen when they ordered Kerviel to pay €4.9 billion in damages, prompting a civil case into exactly how much should be paid back.

The case is of little financial importance to SocGen as Kerviel is unlikely to be in a position to pay back any of the money. However, the case poses more embarrassment for SocGen if the court heavily reduces the amount Kerviel has to pay due to the bank’s failures. The bank has already admitted inadequate internal controls and was fined €4 million in 2008.

The tribunal concluded by saying that Kerviel was fired “without real and serious cause” in 2008. SocGen said it would appeal and described the ruling as a “scandalous decision”.

 

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