Ex-Trader on Trial Over $971 Million Loss at Caisse D’Epargne
Former Caisse d’Epargne trader Bruno Picano-Nacci denied he exceeded his authority when he took positions that led to a 751 million-euro ($971 million) loss, after Paris prosecutors recommended a suspended sentence.
A lawyer for Picano-Nacci, charged with breach of trust, told judges at the close of his trial that his client made risk- management mistakes, while denying he hid those mistakes from superiors or acted outside his mandate.
“He should have cut his positions,” Martin Reynaud, Picano-Nacci’s lawyer, said yesterday. “He just wanted to finish ahead. How is that wrong for a trader?”
Caisse d’Epargne, now part of Groupe BPCE, France’s second- largest bank by branches, announced the loss in October 2008, months after Societe Generale SA (GLE) said it lost 4.9 billion-euros unraveling positions taken by Jerome Kerviel. Kerviel, whose guilty verdict was upheld by an appeals court in October, sued former Caisse d’Epargne Chairman Charles Milhaud for slander over his comment that the loss attributed to Picano-Nacci wasn’t “a new Kerviel affair.” Kerviel lost the case in June 2009.
Prosecutor Serge Roques advised the court during closing arguments to find him guilty and give him a two-year suspended jail sentence. Under French law, Picano-Nacci faces as much as three years in jail and a 375,000-euro fine if found guilty. The 37-year-old said at the trial’s opening he’s unemployed, has four children and that his wife earns about 2,000 euros a month.
BPCE successfully fought a 20 million-euro fine by France’s Banking Commission for risk-control failures preceding the trading loss.
The bank’s “serious risk control failures don’t exonerate Mr. Picano-Nacci,” the prosecutor said.
Picano-Nacci joined the bank in 2003 and took on the derivatives portfolio for Caisse d’Epargne’s eight-man proprietary-trading business in 2006. The bank is seeking 315 million euros from the trader, what the bank calculated as the loss from criminally bad investments rather than just poor portfolio management, lawyer Jean Reinhart said.
In April 2008, the bank decided to terminate proprietary trading and traders including Picano-Nacci were told to close their portfolios by the end of the year and not take on more risk. He stuck to the plan through Sept. 15, 2008, then switched to a “risky strategy,” according to an investigation report.
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