Ex-trader Kerviel says he is scapegoat for Societe Generale, after receiving 3-year sentence

Wednesday, October 6, 2010

Kerviel says he’s crushed by French court sentence

PARIS — Ex-trader Jerome Kerviel, speaking for the first time Wednesday about his tough sentencing in history’s biggest rogue trading scandal, insisted he is a scapegoat for his former bank and compared the penalty to getting “hit on the head with a club.”

The 33-year-old was convicted Tuesday, sentenced to three years in prison and ordered to pay Societe Generale, his former employer, damages of euro4.9 billion ($6.7 billion) — the equivalent of 20 Airbus A380 superjumbo jets.

“I’m starting to digest it, but I’m nonetheless crushed by the weight of the sanction and the weight of responsibility the ruling places on me,” Kerviel told Europe-1 radio.

As some observers began calling for the bank to forgive Kerviel’s astronomical debt, Societe Generale said it doesn’t expect to get all its money back.

“There’s no question of asking one man to pay such a sum,” bank spokeswoman Caroline Guillaumin told French radio station France Info.

She said the bank was “open to finding a solution that’s in the interests of our shareholders and employees, and that takes into account Jerome Kerviel’s situation.”

Earlier in the day, government spokesman Luc Chatel told French radio RMC that this was a “gesture” the bank might consider.

“I responded very clearly that it wasn’t up to the government, it was Societe Generale’s decision to eventually make a gesture, but it wasn’t our responsibility,” Chatel told reporters after the government’s weekly Cabinet meeting.

Kerviel maintained in court that the bank and his bosses tolerated his massive risk-taking as long as it made money — a claim the bank strongly denied, saying he took great pains to cover up his actions.

“I have the feeling they wanted to make me pay for everybody and that Societe Generale had to be saved,” he said.

Of the verdict, he said: “It’s difficult, obviously, when you get hit on the head with a club that way.”

Kerviel is appealing the ruling and says he hopes in the new trial “to prove once and for all that I wasn’t the only one in the boat.”

The bank says Kerviel made bets of up to euro50 billion — more than the bank’s total market value — on futures contracts on three European equity indices, and that he masked the size of his bets by recording fictitious offsetting transactions.

The euro4.9 billion figure is the sum that the bank says it lost unwinding Kerviel’s complex positions in January 2008. It’s a sum nobody realistically expects him to repay. He would not have to pay anything until the legal process runs its course.

Kerviel said he is currently making about euro900 ($1,245) a month working part-time as a computer consultant — he reduced his hours to concentrate on the trial.

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