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David and Société Générale

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com

Look who's fighting back: Jérôme Kerviel, the meek-looking French guy who became famous in January 2008 as the junior trader who’d lost €4.9 billion at French mega-bank Société Générale. Accused of a litany of shenanigans, from unauthorized trading to hacking into SocGen’s computers, he was condemned in 2010 to five years in the hoosegow, with two years suspended. SocGen called him a rogue trader who’d acted without his superiors’ knowledge. Kerviel confessed to a few of the accusations but claimed that his bosses had known about and had tolerated his activities. He just couldn’t prove it.... until now.

It was tough out there in January 2008, two months before the bailout of Bear Stearns: stock markets were cratering, banks were reeling from write-offs, “money-market equivalent” bond funds stuffed to the gills with mortgage-backed securities were blowing up, and real mayhem was on the way. Just then, SocGen conveniently discovered Kerviel in its midst, saw his trades, dumped all his huge positions on the tottering markets over the next three days, thereby adding to the carnage, then tallied up the numbers, and announced the loss: €4.9 billion.

Other banks were writing off even larger amounts—but they blamed lousy investment decisions, failed strategies, putrid SIVs, derivatives gone haywire, or piles of subprime decomposing in basements. But SocGen had a rogue trader. On January 24, it called the police, and life turned into a nightmare for Kerviel.

But on Friday, he struck back. His new lawyer, David Koubbi, announced at a press conference that they had filed a complaint against Société Générale, alleging that it had tampered with evidence. They were quite a pair, the mostly silent Kerviel dressed in a dark suit and pink button-down shirt with the top two buttons unbuttoned, and the articulate Koubbi, similarly attired, and with the top two buttons of his white shirt unbuttoned. A statement of sorts.

Koubbi told the story. During the investigation, some evidence had been sealed. All of Kerviel’s prior lawyers demanded access to it, in vain. But on April 18, the appeals court authorized Kerviel and his new lawyer to see some of it. One item particularly caught their attention: a CD that contained “wild recordings made without the knowledge of Mr. Kerviel, contrary to what the law allows” (video). The weekend before the affair blew into the open, SocGen had summoned Kerviel to its offices and interviewed him for twelve hours between January 19 and 20, 2008, to obtain a confession. Though it recorded the entire twelve hours, the CD only contained six hours of interviews, and only those six hours had been transcribed and introduced as evidence. Koubbi hired experts to examine the CD; they discovered that segments of the interview had been cut out, that the evidence had in fact been “doctored.”

But during the trial, "these pieces were presented as if they had been the entirety of Mr. Kerviel’s confession,” Koubbi said. "That's why we filed a complaint for forgery and using forged documents because it resulted in a manipulation of justice."

Then Kerviel spoke up: "I remember very well addressing one of my bosses and telling him, 'you knew what I was doing,' and he was immediately exfiltrated from the room." Turns out, that scene wasn't on the recordings and didn't make it into evidence.

And they found another compromising piece of evidence that had been sealed, the "Escadrille file." It alluded to fictitious trades that SocGen itself had undertaken to conceal losses, the same kind of trades that it had accused Kerviel of perpetrating.

Already last week, Koubbi had sued SocGen for fraud, alleging it had hidden from the court the fact that it had received a tax credit of €1.7 billion for its €4.9 billion in claimed losses, so that the damages should have been €3.2 billion, not €4.9 billion.

Despite all this, Kerviel hasn’t given up his faith in justice à la Française: "I've never lost hope that justice would prevail, and I hope that the truth will break out,” he said. The truth, if there is such a thing in banking. And he hoped that the lawsuits would help his appeal. A bit of justice would do some good, but France and the rest of Europe have more pressing problems on their hands—keeping the Eurozone together, for example. Because, now even the President of the European Parliament has seen the multi-lingual writing on the wall. For the latest plan that might tear the Eurozone apart even faster, read.... Collapse of the EU is a “Realistic Scenario.”

 

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Sun, 04/29/2012 - 00:26 | 2383173 Joebloinvestor
Joebloinvestor's picture

Not a suprise really.

The French legal system is corrupt as shit, so why not fabricate some evidence?

 

Sat, 04/28/2012 - 22:31 | 2383035 logicalman
logicalman's picture

ANYONE who believes in 'the System' should be beaten with a stick.

 

SIMPLE

Sat, 04/28/2012 - 19:51 | 2382846 Withdrawn Sanction
Withdrawn Sanction's picture

What a bumpy bus ride...what with so many bodies being thrown under it.  Pretty soon there wont be anymore passengers, just the driver(s)....no transfers until the bus comes to a full stop, please.

Sat, 04/28/2012 - 20:45 | 2382905 AldousHuxley
AldousHuxley's picture

this is the only way to kill the beast.

Let them fight each other.

Sat, 04/28/2012 - 16:07 | 2382588 ebworthen
ebworthen's picture

Scapegoats needed; please do as we implicitly say, then we will turn on you, doctor the evidence, and make sure we have a little goat or lamb for slaughter in the public square to blame for the ruined crops, the empty grainery, the "missing" gold.

Sat, 04/28/2012 - 15:22 | 2382528 I am on to you
I am on to you's picture

Ohmy forgot in was the priest,dont help much with the sheeps!

Sat, 04/28/2012 - 15:21 | 2382526 I am on to you
I am on to you's picture

Dont be so hungup America,the S.E.C will in the end safe yall!

The tricklle down effect hasnt started yet,its like with the priest you know,when it rains on the sheeps it drips on the sheeps,jsut need a rain style, NOA.

Itll come in due time,like amen in the church!

Sat, 04/28/2012 - 13:23 | 2382381 RoadKill
RoadKill's picture

Why is everyone on here so bitter.

All this BS is an opportunity to make $.

Grow somr ballz, placr your bets, use the system to your advantage and joim the 1% instead of bitching about it.

If you know a game is rigged you should bet to your advantage, not turn into the stinky drunk guy with a Jesus is Coming sign on his chest shouting gibberish.

Sat, 04/28/2012 - 23:24 | 2383109 BigDuke6
BigDuke6's picture

Yeehaa RK,

lets go get some starbucks and watch american gladiators on fox.

with our big balls out in front in a wheelbarrow.  

you should call urself 'buster gonad' with those big balls of yours

Sat, 04/28/2012 - 19:46 | 2382840 Ying-Yang
Ying-Yang's picture

Do you have children? I hope not.

Sat, 04/28/2012 - 17:04 | 2382671 schatzi
schatzi's picture

Yeah right, who gives a fuck? Why should I care about truth, justice, an equitable society, my kids and my country. If you can't beat them, join them. Right?

 

Wrong. I have a concience.

Sat, 04/28/2012 - 12:41 | 2382333 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

When is it Kweku Adoboli's turn? You would have thought these 'rogue traders' would've got paid off by their employers.

Sat, 04/28/2012 - 12:04 | 2382287 falak pema
falak pema's picture

When jerome becomes saint jerome; the man who is in the image of his financial God; evangelical, mystical, mythical traveller on intense journey up never ending spiral of heavenly staircase, to derivative galaxy of milky way, to Saint Peter himself. 

And now the Church abandons him, imagine his despair. He has to win back his credance as he is no heretic, he did God's work. Truly. 

Sat, 04/28/2012 - 11:35 | 2382243 New American Re...
New American Revolution's picture

And the lesson to be learned is not to sit down with an angry company, prosecutor, or police without your attorney present, under any circumstance or conditions.

Sat, 04/28/2012 - 11:57 | 2382276 disabledvet
disabledvet's picture

this is France. "You have no right to a lawyer." What is a big deal is that such a story is actually being portrayed. My guess would be "prelude to a nationalization"...but that is pure speculation at this point. Obviously this is politically motivated...something for Hollande "prior to" to help him in his election. I don't know what Trader Kerviel get's out of the deal. Once exposed i would have gone to the police. He "did the right thing and got arrested by the people doing the bad trading as well" instead. Clearing you're name is well and good...but then what? I'm glad i'm not up to anything like that. Well..."not formally anyways." (Sorry about that Omega Advisors.)

Sat, 04/28/2012 - 20:44 | 2382877 brettd
brettd's picture

Is France the next Iceland?

Na.  Never happen.  You'd have to jail both the politicians AND the bankers.

More likely to go the "jubilee" route:  "Everyone forgiven!"

Sat, 04/28/2012 - 11:32 | 2382234 Peter Pan
Peter Pan's picture

We are no longer talking just about lies, subversion of the truth, manipulation, fraud, money printing, nepotism, insider trading etc etc etc. We are now in the realm of evil in all aspects of the system in all corners of the world.

At some point when the general populace has been fleeced and exhausted, then and perhaps only then, the evil doers might turn on each other.

I wish someone would keep tabs on stories such as these so we do not lose site of whether we are winning or losing.

Sat, 04/28/2012 - 11:30 | 2382233 I am Jobe
I am Jobe's picture

Excellent- SO in essence the Summation of all forces= ZERo. Fuck this shit . USSA is so fucked and People are still getting satisfaction thru the fucking TV shows.

Sat, 04/28/2012 - 19:55 | 2382848 philipat
philipat's picture

I'm a fraud and a liar, but they are all fucking liars and frauds. Great defence.

I wonder where we are on the space/time continuum regarding morality, integrity and honesty?

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