Kerviel ‘Love’ May Not Be Enough to Overturn Verdict
Jerome Kerviel’s statement last week that he “loved” Societe Generale SA (GLE) may have come too late to help him win a reduced sentence for causing the bank’s 4.9 billion-euro ($6.1 billion) trading loss.
Kerviel lawyer David Koubbi told the appeals court in Paris today that the lower court verdict was “absurd” and asked for a dismissal. Koubbi’s aggressive tactics have frequently led to clashes with Judge Mireille Filippini, who earlier in the case threatened to notify the bar about his treatment of witnesses.
While Kerviel is seeking to throw out a 2010 verdict sentencing him to three years in jail and ordering him to repay Societe Generale in full, his continued attempts to blame the bank have led prosecutors to seek a five-year prison sentence. The 35 year old’s lack of remorse, and his lawyer’s aggressive tactics, may have weakened his chances for an appellate victory.
“I fear it will in some way have repercussions on Kerviel, and the recommendations by the prosecutor reflect that,” said Paris lawyer Stephane Bonifassi, who isn’t involved in the case. “It’s a sign that the appeal didn’t go so very well.”
Filippini said the court would issue its opinion Oct. 24.
Koubbi had a black eye today, which he received after a fight with another motorist last night, Agence France-Presse reported. Kerviel left the hearing three times, mopping his forehead frequently and splashing water on his face in the 30- degree Celsius (86-degree Fahrenheit) heat in a Paris courtroom that lacked air conditioning.
Kerviel changed criminal defense teams at least four times before hiring Koubbi, who had represented him in defamation cases related to the trading loss, about three months before the appeal began. Kerviel quit his job last year to devote himself to his appeal, and worked closely with Koubbi.
Kerviel’s statements on June 21, admitting he’d made mistakes while still saying he believed he had acted in the bank’s best interests, may have been an effort to regain some ground after seeing the ire provoked by Koubbi’s tactics, Bonifassi said.
“Perhaps Jerome Kerviel realized at the end that it wasn’t going so well,” he said.
The trading loss was one of the biggest in history, at 2008 exchange rates exceeding the $6.6 billion Amaranth Advisors LLC lost in 2006, and is more than four times the $1.4 billion of losses by Nick Leeson that brought down Barings Plc in 1995. It wiped out almost two years of pretax profit at Societe Generale’s investment-banking unit and cost several of his bosses their jobs.
The bank, during its own closing arguments this week, asked the court to confirm its right to the full 4.9 billion euros, while acknowledging that actual repayment is unlikely.
The appeal has been marked by sharp exchanges between Koubbi and Filippini, who once called a recess for them both “to calm down” after his questioning of Christophe Mianne, one of Kerviel’s former bosses. Koubbi had repeatedly reminded the witness he was speaking under oath when Mianne’s answers didn’t satisfy him.
“We don’t intimidate witnesses here,” said Filippini, presiding over the three-judge appellate panel. Another day, she called his interruptions “unreal, it’s untenable.”
Koubbi, with two other lawyers, has presented a more aggressive defense than Kerviel’s attorneys did in 2010. He said Kerviel’s former superiors knew he was taking unhedged positions far exceeding the desk’s limits and that the bank used the trader’s deficits to hide its own losses on U.S. subprime mortgages.
That theory “takes a lot of imagination to believe,” prosecutor Dominique Gaillardot said yesterday. No prosecution witnesses supported it and no defense witnesses could offer any proof, he said. His five-year recommendation was tougher than in 2010 when the prosecution called for four years jail time.
Koubbi has needled the press during the hearings, posting on Twitter “Let’s salute the creation of the PIF: press- independent-of-the-facts who assume as their own all of the positions of SG.” Societe Generale’s lawyers referenced the tweet several times in the hearings, including in their June 25 closing arguments.
Today is the final day of the four-week appeal. Filippini will announce at the end of the hearing when the judges will deliver their decision.
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