SocGen Asks Court to Make Kerviel Repay $6 Billion After `Story of a Liar'
Stock Chart for Societe Generale SA (GLE)
Societe Generale SA asked a French court to order Jerome Kerviel to pay it the 4.9 billion euros ($6 billion) the bank lost in January 2008 unwinding 50 billion euros in unauthorized positions the former trader had taken.
“This is the story of a liar, it is the story of a faker,” Jean Veil, a lawyer for Societe Generale, told the court yesterday during the bank’s closing statement to judges. Kerviel “played like the bank was a casino.”
Kerviel, 33, is on trial for abuse of trust, faking documents and hacking into the bank computers, creating fake hedges to mask the trades. He argued his superiors condoned his actions, lifting trading limits and “turning a blind eye” to questions. His actions were “professional mistakes,” not criminal offences, he said in a final statement June 22.
Societe Generale, based in Paris, has victim status at the criminal trial that allows it to seek damages. In France, criminal trials precede civil claims and an acquittal would block any possible civil lawsuits.
The bank “could have asked for more,” Veil said in closing arguments, listing items including interest and reputational harm.
Francois Martineau, another Societe Generale lawyer, told the court yesterday that Kerviel’s story has changed since he was arrested more than two years ago and that his defense case “rests on a contradiction.”
First Kerviel “admitted everything, recognized everything,” Martineau said. “Then he changed his defense,” saying the bank should have known, then that his superiors actively knew, and ultimately saying they’d “encouraged him.”
Daniel Bouton, the bank’s chief executive officer in 2008, yesterday told judges the trading loss was a “catastrophe.” He stepped down from the CEO role after leading Societe Generale’s 5.5 billion-euro capital-raising campaign, and as chairman a year later.
A group of five current and former Societe Generale employees sought damages from Kerviel totaling almost 92,000 euros. Individual investors requested that their losses to be considered as well, asking for 10 euros on top of the lost value of their stakes in the bank.
Kerviel faces as many as five years in jail and a criminal fine of 375,000 euros if found guilty.
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