back to article Software dev turned rogue trader gets jail and €4.9bn fine

The French software developer turned rogue trader who brought French bank Société Générale (SocGen) to the verge of bankruptcy has been jailed for three years and fined €4.9bn ($6.7bn) Jerome Kerviel used purloined login codes from his co-workers and forged emails to create fictitious accounts. He gambled billions from the fake …

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FAIL

Oh fine!

That must be the most meaningless fine ever. He doesn't have the money. He will NEVER have that much money.

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WTF?

Jerome Kerviel is the fall guy for Société Générale

Seems that Société Générale was happy to pocket the profits when things were going well for Jerome Kerviel, even though his outgoing costs of business were beyond his limits.

When the tides changed all of a sudden the bank took notice of his short-circuiting the few safety measures there were in place.

The hypocrisy is that the bank itself was criticised for it's lack of control - but that is forgotten in the criminal justice system of France.

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WTF?

Lord Hi executioner

Wonder if he'll get a discount of he pays within 30 days.

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On the bright side ...

every trade has a winner and a loser.

The person selling a stock thinks the price will go down while the person buying thinks it will go up. They can't both be right. So while this guy lost his bank some €billions all that means is that some other people made all that money.

OK, so there's an element of "We didn't really _mean_ to make all those transactions, so pleeeeeeeeeze can we have our monkey back?" to all of this but for what turned out to be a real financial loss for one trader turned out to be a good day at the office for someone else - maybe they should bung a few Euros in the hat to pay his fine?

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Anonymous Coward

Shouldn't that be..

"French media reckon it would take him 120,000 years to repay the fine on an IT consultant's salary"

Shouldn't that be an infinite number of years on an unemployed consultant's salary?

Afterthought: It should, but the guy will probably find a way to sell his services protecting companies against people doing what he did.

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He;s not unemployed

He currently earns EUR 2300 a month.

(Well, until he loses his appeal and goes back to jail).

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Anonymous Coward

Amazing

Just amazing.

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FAIL

ermm get it right

"The highly leveraged hedge fund trades"

Without wishing to be.overly picky, his activities had nothing to do with hedge funds. He was laying off the bank's own risk

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Happy

Oh, How I Laughed

"...manipulating the Excel spreadsheet reports that were providing the bank's management with trading updates..."

Much of 'management' seems to run on Excel spreadsheets that have no configuration control, no audit trail and no security. It's amazing how a well presented chart can affect people's minds.

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WTF?

Utter bollocks

Why does no one ever speak about just how much money Jerome Kerviel made for the SocGen. This was no rogue trader, he started and ended as all the other puppets do, dangling on the end of a string until the string gets cut.

If the last deal he made had made money, instead of losing money, for the SocGen, his name would never have been known.

The high flying wanker bosses above Kerviel have not been held responsable and yet they had, and always have had, the power to control everything that gets done on the trading desks.

Kerviel did not commit a crime, he made bets, OK rather large bets ( read 50Billion € bets) and unfortunately lost on the last one, big fucking deal. Do the SocGen really want to publicly admit that they allow their traders to play with such large sums, of course they dont, so instead they make up a 2 bit story and find a scapegoat.

If Kerviel had really been some crack, wizard, hotshot, rogue trader he would have set up offshore accounts and whittled away small sums of money that no one would ever have noticed. Fuck he had the capacity to play with 50Bn €, can you imagine that even 0.0001% = 50K. One ten thousandths of a percentage.

Today the upper echelons within the banking systems are firmly in the belief that they are way above and much stronger than the law and capable of redeeming themselves regardless of their crimes. ( No , I am not talking about people at Kerviel level).

Society today no longer punishes those in responsabilty, we fucking reward them with bigger bonuses.

I just hope that Kerviel managed to back up some gritty details pertaining to his ex-bosses and will one day publish them. ( But I doubt that he was that clever).

One day the IT industry grunts, thats you and me folks, will be blamed and responsable for all government / financial institution / [ enter large coprprate entity here] errors due the fact that we have access to the information and therefore probably manipulated it.

Run, hide , change your name/ identity, swap your wife for a Gorrilla named george and camp out in the depths of the deepest jungles. They know you did it, they have the proof, after all you were an IT guy ( read puppet).

I am out of breath now, mines the one with the oxygen tank

PS I feel sorry for Kerviel (Now if he would only pass me the Remote login access codes, what jail is he going to anyway )

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All his bosses are gone.

Almost everyone above JK has left or been sacked, from the President on down.

All but one jumped ship before they were sacked. (The guy who was sacked now has a nice case before the employment tribunal - how could SocGen claim simultaneously that JK's boss should be sacked, but that it was all JK's fault and the bank did nothing wrong?)

Only one of his "superiors" is still there - the head of derived products got a slap on the wrist..

(Source - Today's Libé).

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A 'Symbolic' fine?

WTF is that? Can I ask that I pay a 'symbolic fine' of two hundred and seventeen billion quid instead of paying sixty quid for speeding?

http://www.theregister.co.uk/Design/graphics/icons/comment/wtf_32.png

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Coat

"excel spreadsheets"

LOL.

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WTF?

Meanwhile...

... Societe General have been *completely exonerated* by the Court who judged them to be totally blameless in this matter despite what appear to be blatantly inadequate security precautions and a lack of monitoring systems which should have prevented this sort of thing from happening in the first place.

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Utter crap

If I were a SocGen shareholder I'd be seriously pissed off with a financial firm that could allow 50bn of exposure in derivatives to go "unnoticed" let alone run their entire risk architecture off of Excel (which I don't believe from having worked in several banks). Also they'd have to have been posting massive amounts of margin i.e. cash against these positions and it's not like you don't notice money going out the door. "Last month our posted margin was Xbn, this month it's 2Xbn. Not to worry" - yeah, right. If it looks like bullshit and smells like bullshit then chances are it is. This is just a way of protecting people further up the chain.

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Restitution

He should be required to complete making full restitution to his victims - the people who lost money because his actions depressed the value of stocks they owned - before any money from him is accepted towards payment of his fine.

And, of course, if he fails to pay his fine, he should go to prison instead.

And, as someone convicted of a serious crime, he should not have a responsible job working with computers - for the rest of his life, he should be limited to jobs not requiring trust, involving manual labor. I'm astounded he received a mere slap on the wrist for so serious a crime.

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FAIL

There is no fine

SocGen has been awarded damages.

It's up to SocGen to recover the money.

They can probably get a judgement to seize all his assets, and take that part of his salary above the minimum wage untill he's finished paying it off.

"he should be limited to jobs.. involving manual labor."

Well, since he lives in a free country, such an insane judgement would immediately be struck down.

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It's all crap

It is impossible for a bank like SocGen to sit on such a large futures position (the key word is *futures* here) without half the bank knowing about it.

It that indeed happened (that the trader managed to conceal such a huge futures position without detection) the bank licence must be suspended immediately, trading stopped, all management fired and completely new team take over.

I don't see any of this taking place, so to me that is an admission of guilt on the part of the French financial establishment. That "rogue" trader is just a scapegoat.

All financial voes due to the evil Algo-Saxon model? My ar*e!

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WTF?

Trading figurers reported by *excel* spreadsheet

Share trading systems *should* be able to spew this information out to management staff in *whatever* level of detail they want it on whatever frequency they want it.

I guess either mangers with ADHD or unable to RTM.

But the icon says it all. People thought Nick Leeson got away with his fail for so long because of the Englishman's word is his bond routine (IIRC that was 1987).

Icon says it all really.

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Big Brother

I don't think the fine is meaningless, as such

I may be wrong, but I suspect that SG will be able to put the 5 billion euros on their balance sheet as money owing, then write it off as a bad debt, giving them a massive tax write-off.

Until I had that thought, I was thinking that it just showed that Judges do have a sense of humour, but now I'm thinking the Judge was handed a bulging brown envelope to encourage him to levy the fine.

Just a thought, like, and I could be very wrong about how the French tax system works.

GJC

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Stop

*Yawn

Some numbers on a bunch of computer screens changed. The world did not come to an end.

Why aren't people more honest in describing the money markets as little more or less than a numbers video game. Far too much reality is being assigned to something that is entirely abstract and empty.

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Linux

Rogue Trading ?

Do you seriously expect us to believe senior management weren't aware of his activities. Isn't it normal for traders to engage in such risky investments and management turn a blind eye, as long as they make money.

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Can't hide these things

These were futures trades, not OTC. They appear on the statements from the exchange every day. They are margined every day. You can always trace individual trades, their initial price and today's mark-to-market from these statements even if you don't have any control system at all in-house.

So, the middle office would have seen the trades, the volume and M2Ms. Immediately, the question of the volume limit per trader would have popped up - just because the shear number of lots done by that guy. Not to say of the total margin calls size, exposure per client (even if the client is fictitious) and so on.

I absolutely believe that guy when he says the management knew about it and approved it while he was in the money.

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Paris Hilton

eh

You have to ask what the managers, auditors, compliance teams etc where doing.

"fictitious accounts" still need to have money in them, it has to come from somewhere and those same accounts will be seen by the back office team as a whole, along with mangers and others.

So the banks gets a fine it wont enforce which it can write off as a loss (hidden state subsidy) springs to mind, the alleged Perp has a job and probably a nice cushion not to speak out and his appeal will see his sentence reduced to a suspended one is my prediction.

Bank protected, scape goat produced, back to the bonus treadmill

Paris, well its obvious really

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You obviously don't know how banking works

""fictitious accounts" still need to have money in them,"

No bank account has "money" in it.

It's all just numbers and promises.

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@John Hughes

"It's all just numbers and promises."

Well, they become real enough when you see them on your credit card statement, ah?

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M7S
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Actually he can pay it off

He just needs the debt to be confirmed as interest free and then wait for hyper inflation to rise to Weimar republic levels. (See: Quantitave Easing)

Its something that governments use to a lesser extent (unless in Zimbabwe) to get rid of their burdens of public debt. Its already the case in the UK where any savings are getting a negative real return.

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Qualitative easing?

He's not in the UK.

He owes the cash in a real currency, not dodgy stuff like sterling.

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Unhappy

Terrible Blow to British Prestige

Britain is the master of the establishment whitewash (there's a good one going on at the moment).

But this French court is making our cover-ups look thoroughly second-rate. I salute them, but I regret our lost pre-eminence.

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