Jérôme Kerviel (trader of Societe Generale) is a French stock trader (broker) who worked for investment firm Societe Generale and was convicted of a $7.2 billion trading loss in 2008. Jerome was also accused of exceeding his authority. The story is surprising in that an ordinary worker, whose wages are not higher than 100 thousand euros per year, brought a loss of 4.9 billion euros. Investment bank Societe Generale trader Jérôme Kerviel is described as a con man who worked on the financial exchange without permission for certain trades.
The story has become known to the whole world, because this case was almost the first in the world history of exchange trading, when an ordinary broker takes into circulation almost all bank funds. There are many opinions around this case. Some think it's a really serious oversight, others say it's a deliberate scam, and still others are of the opinion of a worldwide conspiracy and the like.
In May 2010, Kerviel released a book of his own authorship called L'Engrenage: Memoires d'un trader ("Spiral: Memoirs of a Trader"). In it, he tells about the small details of that memorable incident. In the book, the author claims that the authorities had control over his trading activities, and that such trading practices were common in the bank. Accordingly, the story of the collapse of Jerome Kerviel and the investment bank Societe Generale itself is the fault of everyone, not just one employee. Jerome describes events in this way in his book. Who is really right, ordinary people are not given to know.
Jerome Kerviel: biography, early life
Born on January 11, 1977 in the French city of Pont-l'Abbe (Brittany). His mother, Marie-Jose, was a hairdresser in a beauty salon, and his father, Charles, worked all his life as a blacksmith (he died in 2007). Kerviel has an older brother, Olivier.
In 2000, Jérôme Kerviel graduated from Lumvière Lyon 2 with a Master's Degree in Organization and Control of Financial Markets. Prior to this, Jérôme received a bachelor's degree in finance from the University of Nantes.
During an interview, one of the former teachers of the University of Lyon said that Kerviel was a simple student who did not differ in any way from others. He was a diligent student who studied finance with great interest, was not distracted by girls and alcohol. In 2001, at the suggestion of Thierry Mavic (mayor of the city of Pont-l'Abbe), Kerviel ran in the city electionsPont-l'Abbé is from the centre-right UMP party, but was not elected. As Thierry Mavik himself later commented, Kerviel did not have enough sincerity to win: he was too reluctant and modest to communicate with voters. Later, the same position was headed by the future French President Nicolas Sarkozy.
Bank job
In 2000, Jérôme Kerviel got a job at the investment bank Societe Generale. Here he worked in the compliance (standardization) department. After 2 years, he was promoted to assistant junior trader, and after another 2 years, Kerviel became a sovereign and full-fledged financial trader. It is worth noting that he was hired for this position without the obligatory scientific education in mathematics. Jerome Kerviel received a good, but modest salary by the standards of the bank. He earned no more than 100 thousand euros a year, plus bonuses and bonuses.
Jerome Kerviel is the biggest debtor in the world
In January 2008, Societe Generale announced that as a result of capital fraud by one or more employees of the enterprise, the bank suffered heavy losses equal to just under five billion euros. After a while, it became known that this worker was Jerome Kerviel. The management of the bank and the entire administration, headed by Daniel Bouton (the owner), officially declared that Jerome was to blame for everything. The allegations were that Kerviel used unauthorized powers by opening special bank accounts for 50 billion euros, and after his fraud covered his tracks. The broker said that the bank management was well aware of the openpositions of 50 billion euros.
The story of Jérôme Kerviel
Bank staff said that Jerome was a rather modest and reserved person and had mediocre professional experience and intelligence. Based on this, many argued that Kerviel could not independently pull off the financial scam, in which he was accused by the leadership. It is widely believed that the company simply made a “scapegoat” out of its employee in order to keep silent about its own miscalculations.
In 2007, the broker's father (Charles Louis) died, and some part of society believed that this was the reason for the reckless thinking that led to billions in financial losses. In addition, rumors spread that Jerome had divorced his wife shortly before the incident, or broke up with his girlfriend.
At the end of January 2008, Jerome Kerviel was detained by the authorities. In the preliminary charge, it was pointed out that the bank's trust was abused. He was released on bail, but 10 days later he was arrested again. March 18, 2008 Jerome was released.
Legal consequences of Kerviel's dismissal
In January 2008, information appeared in the media that the bank had calculated its employee, who was Jerome Kerviel. After some time, information surfaced that the dismissal was committed in a way contrary to the law. Allegedly, the dismissal process should take place in accordance with the formalities of legislative procedures: Jerome should have been invitedto the office and personally convey information about the dismissal and its reasons. Based on these data, Jerome went to court on April 3 and demanded monetary compensation. At the end of the same month, information slipped through the media that the former broker and the largest debtor in the world got a job in an IT company.
In December 2008, the investigation removed all suspicions from the leaders of Societe Generale. Consequently, Kerviel could no longer count on the fact that responsibility could be shared with the leaders of the bank.
On January 26, 2009, the investigative committee released information that the case of Jerome Kerviel had been completed. The hearing was scheduled for 2010: if the broker is found guilty, he faces three years in prison and a fine of 376,000 euros.
Courts, hearings and outcome
On June 8, 2010, Kerviel's hearing took place in Paris. The broker himself relied on the fact that all members of the administration and management of the bank knew about his financial fraud. Representatives of Societe Generale denied this information. The final result took place on October 5, 2010: Jerome Kerviel's guilt was proven, and he was sentenced to 3 years in prison and two years of probation. Also, the judge's verdict sentenced Jerome to compensate the financial losses of the investment company in the amount of 4.9 billion euros.
In turn, the former employee of the bank tried to appeal his sentence in a court of second instance, but in October 2012 they agreed with the earlier verdict. If Jerome continued to earn about 100 thousand euros a year, then it would take him 49,000 to pay off the termyears. Kerviel's last hope was the French Court of Cassation.
Latest news
In the summer of 2016, the debt of five billion euros was removed from the broker. Instead, the Court of Appeal sentenced Jérôme Kerviel to compensation in the amount of one million euros. During the same period, the broker sued his bank for about half a million euros for his illegal dismissal in 2007.
