Rogue trader gets prison, huge fine
A little-known trader at a French bank is sentenced for making enormous unauthorized trades.
That's the question that will haunt Jérôme Kerviel for the rest of his life. Kerviel, just 33 years old, was sentenced to at least three years in prison Tuesday for making rogue bets that almost collapsed French bank Société Générale.
He was also ordered to repay the amount the bank lost in the whole mess: $6.7 billion. Based on what he now makes as a computer consultant (he got canned from the bank long ago), it will take 178,000 years to pay what's owed, The Wall Street Journal calculates.
He'll never be able to pay it, obviously, but by shoving the burden over to Kerviel the bank gets out of repaying $2.4 billion in taxes on the losses.
Kerviel said in his trial that his superiors turned a blind eye to his trades and even tacitly encouraged him to keep going -- as long as he made a profit, The New York Times reports. Post continues after video:
He was a superstar in the fourth quarter of 2007, when the bank made nearly $2 billion in profit from his illicit trades. But when the financial world tumbled the next year, the Times reports, eight large trades Kerviel instigated exposed the bank to nearly $70 billion in risk.
The Times reports that Kerviel become somewhat of a hero to the French, viewed as a scrappy upstart from a lower-class family who was able to deceive the bank's elite.
Now the bank says it's "more aware" and is cleaning up its act. Shareholders in the U.S. tried to sue the bank for hiding the losses, but that suit was dismissed, the Times reports. A recent Supreme Court decision said investors couldn't sue in the U.S. for problems with investments in foreign companies.
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