Rogue trader responsible for $6 billion loss..."it wasn't my fault, I'm a scapegoat"!
Ha ha ha.
Sure, whatever you say.
Ha ha ha.
Sure, whatever you say.
Defence paints accused trader as ‘scapegoat’
Susan Sachs
13:13 EST Tuesday, Jun 08, 2010
Paris — Jérôme Kerviel, the former trader whose high-risk bets cost one of France’s biggest banks nearly €5-billion ($6.1-billion), is something of a folk hero to many people in France. One of his online fan clubs painted him as a hapless casualty of unbridled capitalism, a “victim of a faithless lawless system.”
The solitary, nondescript young man appeared in court for the first time yesterday and his defence unfolded along the same lines. Mr. Kerviel was not a rogue trader, according to his lawyer, but a little guy caught up in a rogue system of speculative high finance.
“This defendant is a scapegoat,” said the attorney, Olivier Metzner. “He’s a scapegoat that they used and profited from, and when they didn’t need him any more, they discarded him.”
Mr. Kerviel, 33, is at the centre of a spectacular trading scandal at France’s second-largest financial institution, Société Générale SA. In January, 2008, the bank discovered that his transactions had left it exposed to the tune of €50-billion worth of unhedged positions on the futures market.
After unwinding them over a period of three days, SocGen ended up with a loss of €4.9-billion. It was the biggest loss attributable to a single trader in banking history. Mr. Kerviel has admitted he regularly exceeded his trading limit and created a record of fictitious transactions to suggest he hedged those trades. But he said his objective was to make money for the bank. The job of a trader, as he put it, is like being a prostitute at “a big bank orgy.”
He told the criminal court in Paris that his supervisors at the bank had to be aware of the colossal positions he was taking, since they all worked in the same open and crowded Delta One trading desk. “Everything is heard,” he said on opening day of his trial. “Everything is seen.”
Mr. Kerviel is charged with breach of trust, falsifying documents and hacking into the bank’s computer system. He faces up to five years in prison and a fine of €375,000 if convicted.
The trial is expected to last three weeks.
Mr. Kerviel’s argument, previewed in a memoir published last month and in numerous recent talk-show appearances, is that the SocGen culture encouraged and rewarded aggressive risk-taking. His bosses were aware he had moved from being market maker to speculator, he said, but did nothing as long as he made a profit on his trades.
“I didn’t invent the methods I used,” he wrote in his book, The Spiral: Memoirs of a Trader. “They were being used all around me, although perhaps not the same extent as I used them.”
The bank is a civil plaintiff in the case, which means its lawyers will be able to question Mr. Kerviel in court. It has asked for damages in the amount of its losses, although officials have said they do not have much hope of recovering the money from their former employee.
Mr. Kerviel served 38 days in jail after his arrest. He said he now earns €2,300 a month as a computer consultant.
Once the losses came to light, an internal bank inquiry revealed that the SocGen back-office monitors had sent out 74 alerts about Mr. Kerviel’s activities in the three years he worked as a trader. Other queries were sent to the bank by Eurex, the German derivatives exchange, before he was questioned by bank officials.
The French Banking Commission, in a separate investigation, found “serious deficiencies” in the bank’s system for detecting fraud or trading irregularities. It fined the bank €4-million. Daniel Bouton was replaced as chief executive officer and resigned as chairman of SocGen in 2008.
Jean Veil, one of the bank’s attorneys, said this week that SocGen bore the same responsibility for its losses as would a homeowner who leaves the windows open and then gets robbed. It might be seen as imprudent, he said, yet “the burglar is responsible for the burglary.”
Mr. Kerviel started at the bank in 2000 and was promoted to a front-office job as a trader in 2005. At the time his career unravelled, his take-home pay was €48,000 a year and he was living in a 45-square-metre apartment.
He said he spent all his time at the office, which he described as a self-contained pressure cooker cut off from the outside world. He only realized how much, he told an interviewer last month, once he was no longer there. “I saw myself as invulnerable,” he said.
Special to The Globe and Mail
