Jerome Kerviel told a Paris appeals court today that his only goal was to make money for Societe Generale SA (GLE) and reiterated his superiors knew he was taking positions that exceeded his trading limits.
The former trader answered questions from the court as well as lawyers for the bank and himself about the events of January 2008, when Societe Generale unwound his positions and announced the resulting 4.9 billion-euro loss ($6.2 billion). He has said previously that his actions were well-known and he never tried to personally profit from the trades.
“I did it to make money” for the bank and “not a penny went into my pocket,” Kerviel said on the fifth day of his appeal trial. “My superiors saw everything, knew everything, and pushed me to make money.”
Kerviel was convicted in 2010, sentenced to three years in jail and ordered to repay the loss in a verdict that held him solely responsible. Kerviel said during hearings last week that the bank allowed him to exceed his limits because it foresaw losing money on the subprime mortgage market and was using his unhedged positions as cover for those potential losses.
Judge Mireille Filippini described documents submitted to back up the claims as “nothing new.” Philippe Hoube, a broker at Newedge Group, who wrote an unsigned letter included with the documents, will testify tomorrow.
Hoube said Societe Generale filled Kerviel’s account with losing operations before unwinding it to increase the loss it could attribute to him rather than announce as its own, Liberation newspaper reported today, quoting the broker.
The full 4.9 billion-euro loss can’t entirely be blamed on Kerviel, Hoube said, according to the newspaper.
Societe Generale said it will address Hoube’s “incorrect analyses and the wrongful allegations” in a note to the court.
“Societe Generale will reserve its case for the court and provide well-argued and detailed responses to all these claims,” the Paris-based bank said in a statement.
Luc Francois, one of the Kerviel’s superiors at the time and the first witness to testify at the appeal, said the theory the bank knew of Kerviel’s outsized trades and used him as a fall guy for subprime losses was “a gigantic lie” and managers were in “complete shock” when they learned of the situation.
“No member of the Societe Generale hierarchy was aware,” said Francois, who is to start a job as head of capital markets at Natixis SA in September.
Francois also defended the bank’s secrecy while it unwound the trades, saying Societe Generale “would have been dead” had the news gotten out of the exposure during the sell-off.
Claire Dumas, head of the bank’s operational risk department, said France’s market regulator was kept informed as Societe Generale sold off Kerviel’s positions and the bank followed market rules for undertaking such an operation in terms of confidentiality, secrecy and the monitoring of the increasing losses.
To contact the reporter on this story: Heather Smith in Paris at firstname.lastname@example.org
To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net