SocGen Ex-Trader Kerviel Jailed After Three-Month TrekFabio Benedetti-Valentini and Caroline Connan
Jerome Kerviel, the former Societe Generale SA banker convicted in one of history’s biggest trading losses, has returned home to serve his three-year sentence after cutting short his crusade against the industry he once served.
Kerviel walked across the French border from Italy at about midnight to comply with a deadline to surrender. He was taken away in an unmarked police car and jailed in the Mediterranean city of Nice. The 37-year-old Frenchman had set off on foot for Paris from Rome nearly three months ago after a brief meeting with Pope Francis that he said inspired his planned 1,400-kilometer trek.
Kerviel’s transgressions first came to light in January 2008. His bad bets rocked the financial world and stirred a national debate about the banking culture even before the financial crisis hit Europe.
The unwinding of his unauthorized bets of more than 50 billion euros ($68.5 billion) exceeded the market value of France’s second-largest lender and resulted in a record loss of 4.9 billion euros for the Paris-based bank. By comparison, JPMorgan Chase & Co. lost $6.2 billion in 2012 from bets on derivatives in the so-called London Whale case.
“I am ashamed to have been part of this system,” Kerviel said this weekend in a Bloomberg Television interview over a four-kilometer walk between an Italian village called Latte, or Milk, and the French border town of Menton on the Mediterranean coast. “I was in the system and I let myself get drawn into the system.”
The Cour de Cassation, France’s highest appeals court, in March rebuffed Kerviel’s efforts to overturn a lower court ruling that found him guilty of abusing the bank’s trust, falsifying documents and entering fake data into computers as part of his trades.
The court also ruled that the bank’s 2008 unwinding of the former trader’s unauthorized bets needs fresh scrutiny. The court accepted his civil appeal that challenged the bank’s claim that he was solely responsible for the lender’s loss from liquidating the positions.
Kerviel’s term is less than half that of Kweku Adoboli, the former trader who was sentenced to seven years in jail in UBS AG’s $2.3 billion loss. According to French rules, Kerviel’s three-year conviction will be cut in half, then reduced to take into account the five weeks he spent in detention in 2008 during the investigation.
Kerviel has appealed to President Francois Hollande to grant immunity to people within the French judicial system who want to criticize the way his case was handled.
“I have asked President Francois Hollande to grant that people who want to denounce the judicial system not be penalized for what they’ve got to say,” Kerviel said in the interview. He said he hadn’t sought immunity for himself.
“He is a crook,” Finance Minister Michel Sapin said on RTL radio yesterday. “He shouldn’t address the President of the Republic that way.”
Kerviel’s plea to Hollande is “scandalous,” Jean Veil, Societe Generale’s lawyer, said today on Europe 1 radio. As a Societe Generale trader, Kerviel “was there to do his job, he went beyond his authority and that’s why he has been convicted.”
Kerviel completed about half of the trek he began after his chat with the pope on Feb. 19. In a March interview, Kerviel said he was not trying to get publicity or sympathy or to keep himself out of jail.
His walk, he said, was a personal journey aimed at spreading the message of Pope Francis’s November attack on the “tyranny” of financial markets. The pope has criticized capitalism for its “idolatry of money.”
On his last stretch, Kerviel attended Mass on May 17 in the Italian town of Ventimiglia. He then walked through a 557-meter tunnel to the French border where he was greeted by about 300 people, including many supporters. He made his plea to the president but refrained from immediately crossing the border.
A French priest who accompanied Kerviel for the last few days said before Kerviel was taken into custody that he would continue the march to Place de la Bourse in Paris.
“I’ve promised Jerome and his supporters that I would keep walking in his place,” Patrice Gourrier said. “Jerome made a promise to the pope. He was in the system. He wants to reform the system and bring his knowledge, so his place is not in jail. His place is in conferences, in universities.”
Kerviel -- a native of Brittany who rose through the ranks to Societe Generale’s trading floor without having attended any of France’s elite schools -- became something of a cult hero in his country after the 2008 loss.
There was a comic book, fan clubs and T-shirts supporting his cause. A poll taken after news of the loss showed 77 percent of French respondents saw him as a “victim.”
Roselyne Morizot, 66, a retired former employee at a French regional office who now lives in Menton, was among Kerviel supporters at the border.
“There was no personal gain,” she said. “He is not a thief. I am here to back him. Our prisons are full, and he is not dangerous to society,” so rather than sending him to jail, they should assign him to do social work, Morizot said.