French rogue trader to be sentenced on Tuesday for billionaire trading fraud case

[News_Editor]

French rogue trader to be sentenced on Tuesday for billionaire trading fraud case

2010-10-05 07:00:24 GMT+7 (ICT)

PARIS (BNO NEWS) – French rogue trader Jerome Kerviel will be sentenced on Tuesday for his responsibility in the $6.7 billion trading fraud case, one of the biggest in history, France24 reported on Monday.

Kerviel, 33, faces up to four years in prison for covert stock trades that cost the Societe Generale bank €4.9 billion. A Paris courtroom will pass on Tuesday the verdict on the defendant, two years and a half after the scandal broke.

The Societe Generale bank suffered the worst crisis in its existence and blamed Kerviel due to his regular practices of exceeding trading limits and logging false transactions to cover his gambles. However, the bank said that this was a common practice among traders and supervisors ignored it as long as profits were high.

Kerviel claims that he is being the scapegoat of the bank and victim of an out-of-control banking system. He was accused of breach of trust, forgery and entering false data into computers. The defendant alleges that his former employers knew and approved his risky deals which were visible for colleagues and bosses on the trading desk.

In January 2008, the risky deals were discovered and the bank admitted failing in its controls and were fined with €4 million that July. Societe Generale said during trial that Kerviel's supervisors were not able to detect the deals because the defendant used false information to cover them up.

A few bank executives resigned in the aftermath of the scandal, including longtime Chairman Daniel Bouton. Kerviel's superiors were questioned in the probe, but none of them face charges. The bank wants €4.9 billion in compensation from Kerviel.

Societe Generale has gradually recovered from the trading scandal but its advancements were tackled by the global financial crisis in late 2008. This year the bank reported a €1.06 billion profit for the first quarter of the year.

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