French rogue trader Jérôme Kerviel jailed for three years and ordered to repay €4.9 billion (which he'll earn in 300,000 years)

Frenchman found responsible for biggest loss in trading history


Jérôme Kerviel, the most spectacular rogue trader in financial history, today lost his appeal and was jailed for three years and ordered to repay €4.9bn to his former employer.

Kerviel, 35, claimed during appeal hearings in June that the French bank Société Générale tacitly approved his risky trades and exploited the collapse of his position in 2008 to “bury” its own losses in the US sub-prime debacle.

The Paris appeal court today ruled that Mr Kerviel was solely responsible for the €4.9billion loss – the biggest in trading history – because he had evaded internal controls to make colossal, one-way bets of up to €50billion on European stock-market futures.

Mr Kerviel, now earning €30,000 a year in a computer company, is expected to seek leave to appeal to France’s highest court, the Cour de Cassation. In theory, even if he handed over all his after-tax earnings, it would take him around 300,000 years to repay his losses to SocGen.

The bank today said that it would not try to recover the whole sum but that it would claim any money that Kerviel received from book or film contracts.

The “affaire Kerviel” exploded in early 2008, at the beginning of the global financial crisis. Kerviel, a relatively junior trader, was found to have made massive one-way trades on the direction of European stock markets.

In theory, he was supposed to make simultaneous “bets” on stock exchange futures going up and down to earn modest amounts of money on tiny margins between the two. Instead, he “faked” covering trades and hacked into computers to defuse the bank’s internal safeguards.

For almost two years, Kerviel made large gains. In early 2008, the extent of his colossal exposure was discovered and SocGen unscrambled his positions, reporting a total loss of €4.9billion.

At his original trial in 2010, and at the appeal hearings this summer, Kerviel and his lawyers admitted that he had “lost all sense of reality”. But they called a string of witnesses who said that he was also a “victim” of a “greedy” world financial system which had itself lost touch with reality.

While Kerviel was winning, they argued, the bank tacitly approved his dealings. When he got into trouble, he was made a scapegoat for the bank’s wider losses in the financial crisis. The trader had never attempted to embezzle his “winnings” when his trades were succeeding, they said. His only obsession was to prove himself to be a master trader in the eyes of the bank.

In its ruling today, the Paris appeal court rejected this argument out of hand. “It is patently obvious,” the court said, “that the losses were caused by directional positions taken without authorisation for a total of €50billion, concealed by fictional positions for the same amount.”

Kerviel, the court said, had “clearly acted without the knowledge of his employer” in betting “exorbitant” amounts “wholly without cover”. The appeal judges upheld Kerviel’s October 2010 conviction in a lower court for forgery, breach of trust and unauthorized computer use. It confirmed the sentence of three years in prison, with two more suspended.

Kerviel’s lawyer, David Koubbi described the verdict as “an absolutely lamentable miscarriage of justice”. He said that his client would consider a further appeal. Kerviel remains free until that decision is made.

Counting the losses: The biggest losers

Ongoing: The ongoing trial against Kweku Adoboli has reached its sixth week. The 32-year-old former trader at Swiss bank UBS is accused of causing losses of $2.3bn and faces four criminal charges.

February 2009: Alexis Stenfors, former senior trader at Merrill Lynch, was banned from working in the City after admitting he deliberately overvalued his trading positions to hide losses of $100 million.

February 1995: Barings, one of Britain’s oldest investment banks, collapsed after Nick Leeson, a futures trader in Singapore, lost £860m in derivatives trading. He was jailed in Singapore.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + Commission: SThree: Are you great at building rela...

Ashdown Group: Database Analyst - Birmingham - £22,000 plus benefits

£20000 - £22000 per annum + excellent benefits: Ashdown Group: Application Sup...

SThree: Recruitment Resourcer

£20000 - £25000 per annum + Uncapped Commission: SThree: Do you want to get in...

Ashdown Group: Project Manager - Birmingham - up to £40,000 - 12 month FTC

£35000 - £40000 per annum: Ashdown Group: IT Project Manager - Birmingham - ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before