Business

Prison, $7b fine for French trader

Penalty upheld; Societe Generale case stirs public

Many in France believed Jerome Kerviel’s claim that he was a victim of an unjust system. Kerviel said Societe General did not complain when his unauthorized trades made money.

Remy de la Mauviniere/Associated Press

Many in France believed Jerome Kerviel’s claim that he was a victim of an unjust system. Kerviel said Societe General did not complain when his unauthorized trades made money.

PARIS — The Paris appeals court on Wednesday ordered former Societe Generale trader Jerome Kerviel to spend three years in prison and pay back a staggering $7 billion in damages for one of the biggest trading frauds in history.

The 35-year-old Kerviel, who never profited personally from his unauthorized trades, says he was a scapegoat for the bank and a victim of a financial system that runs on greed and profits. He will appeal his case to the highest court.

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‘‘I will continue to fight,’’ he said in an interview with RTL radio. ‘‘I think the judgment is protecting Societe Generale.’’

He called on those in the banking industry, notably Societe Generale employees, to step forward and speak up about how the bank’s managers knew about the trades.

A lower court convicted Kerviel in October 2010 of forgery, breach of trust, and unauthorized computer use for covering up bets worth nearly $65 billion — more than the market value of the entire bank — in 2007 and 2008.

By the time his trades were discovered in early 2008, when banks were sliding into a global crisis, he had amassed losses of almost $6.5 billion on those bets.

The sentence — a five-year prison term, with two years suspended, plus the payback of all the losses he incurred — shocked many in the French public. After a global financial crisis that many blamed on big banks, many believed Kerviel’s claim that he was a victim of an unjust system.

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The appeals court Wednesday upheld the full conviction and sentence. It did not send Kerviel directly to prison, leaving him free pending his decision on whether to appeal to the Court of Cassation. He has five days to make that decision.

Kerviel had sought an acquittal, saying the bank had turned a blind eye to his exorbitant trades as long as they made money. Prosecutors and the bank say that isn’t true.

Societe Generale lawyer Jean Veil said the verdict was ‘‘a great satisfaction.’’

He suggested the bank would take into account Kerviel’s income and assets and not seek full compensation for the damages, which Kerviel would unrealistically be able to repay in his lifetime. ‘‘Societe Generale will look at it with realism,’’ Veil told reporters.

Kerviel was fired from the bank and held a modest job for a while as a computer consultant. He was unemployed at the time of his appeals trial earlier this year.

An internal report by the bank has said managers failed to follow up on 74 different alarms about Kerviel’s activities.

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