In a stunning verdict (stunning by French standards, anyway), rogue Societé Generale trader Jerome Kerviel was sentenced to three years in jail, another two years suspended sentence, and was ordered to repay SocGen €4.9 billion, roughly $6.8 billion USD. The 33-year old trader maintained throughout the trial that his superiors were not only aware of his activity but approved it.
Kerviel admitted regularly exceeding trading limits and logging false transactions to cover his gambles, but said this was common practice among traders and that his bosses turned a blind eye as long as earnings were high.
Thus far the reaction on the street, at least among the people I've spoken to (I was alerted to the verdict while grocery shopping when an older French female friend of mine called me screaming about the miscarriage of justice and wondering how they could do such a thing to a nice boy like Jerome) is that it is all a huge cover-up by SocGen and that they let a kid who didn't make a penny off the fraudulent trades take a fall for the bank.
As for the disgorgement order, that's gonna be a tough one. Kerviel supposedly didn't make anything from the trades, and has been working as a GeekSquad on-call IT guy for €3,000 a month ever since being fired. At that rate, he'll be working for free for the next, oh..., 136,000 years to repay the fine.
I'm no legal expert, but I'd say the kid is screwed.
So what do you guys think? Did he take the fall for the bank? Is the sentence excessive? Take into consideration that Bernie Madoff, who orchestrated a bona fide fraud for decades, is really no worse off than Kerviel despite his 150-year sentence. Actually, Bernie's probably much better off if the rumors that he's hidden millions of dollars are true. Did SocGen just throw a lower-level guy under the bus to protect the higher-ups?
Ed, I must admit when I heard this guy was going to jail, well, I was concerned he was you. Trader, living in Paris and all that. Glad you're still with us.
The French are dicks. I feel bad for the kid, he clearly got done.
Young Monsieur Dantes at the Château d'If, but where is Mondego?
Good Job! You must read dem books real good.
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He definitely got thrown under the bus!
While I do think he got thrown under the bus, I think everything except for the fine is acceptable.....that fine is just mean. They are going to take everything that guy has and he is never going to recover.
Pretty funny rundown here:
ROGUE TRADERS GALLERY
How is this guy going to pay SG $6.8 Billion? Certainly he's not worth this much. Does this mean he is forever indebted to SG? If so, that may be worse than a life sentence.
How in the hell does SG fail to authorize $7B in open positions?
I've always wondered that as well. How can the risk management of these firms be that poor?
It'll be like the Al Sharpton thing, he'll have his wages 'garnished' forever but barely actually pay anything
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I think that he doesn't deserve this sentence. SG just wanted a scapegoat for their 5 million € loss. I am pretty sure that his manager was aware of what Kerviel was doing.
I'm really pissed about this news source coming out. I have a paper and a presentation due in a week on this guy for my derivatives class and I just got done with it... now I have to research all this BS thats going to come out for the next week about it.
But really? $6.8b fine..? a perfect chance to show the world that the French are going to do something right and make a stand against this kind of trading and they do something symbolic like this and it makes the whole thing a joke. We'll see how the appeal goes.
This is what happens when non-targets get into front office.
Anyone know what ever happened to Howie hubbler?
barboon-
http://newskf.com/howard-howie-hubler-trying-to-rebuild-his-life/11491/
I read about Howie Hubler's new venture in the last month. Apparently he's been collaborating with the original big swingin' dick, Lewis Ranieri to address the underwater mortgage problem.
http://online.wsj.com/article/SB100014240527487046212045754871824196397…
Actually they've both started really cool ventures. I read somewhere Ranieri is buying distressed mortgages, refinancing with homeowners and making money off the smaller spread. This seems like it would be a pretty tedious process?
What Hubler is doing different is promising homeowners to provide some kind of rebate if they keep making underwater payments.
Absolutely ridiculous - how can you fine an individual $6+ billion? It's comical, clearly he'll never be able to pay it, and this sets one hell of a precedent (traders responsible for 100% of the losses to their banks as a result of "unauthorized" trades).
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