Bosses at French banking giant Societe Generale were aware of the activities of "rogue trader" Jerome Kerviel, a top detective working on the case reportedly told an investigating judge, according to France24. [6] The French investigative news website, Mediapart, quoted Nathalie Le Roy as telling judge Roger Le Loire she was "certain" that Kerviel's superiors "could not have been unaware" he was taking wildly risky bets on derivatives. However, as Bloomberg reports, SocGen, in a statement released on Monday, that several judicial decisions have assigned exclusive criminal responsibility to Kerviel, adding "it’s just the opinion of a person and not based on the discovery of new documents."
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Having been hung out to dry by his bank after Jerome Kerviel allegedly brought Societe Generale to its knees in 2008 with losses of nearly five billion euros ($5.7 billion) from unwinding his trades of up to 50 billion euros ($57 billion). As we explained previously, something did not add up abiout his single-handed scapegoating... [8]
From 2005 through 2007, Kerviel made increasingly large trades, and as his profits rose, he became more confident. It was “intoxicating,” he said. At the end of every day, his direct supervisor came by and asked how much he’d made and encouraged him. And the hierarchy set his ever growing objectives based on profits from the prior year. In 2007, he made €55 million for the bank, which became the basis for his 2008 objective. He was so successful that the hierarchy suggested in an email that the bank “adopt the system Kerviel.”
In the trading room of about 100 traders, word of the magnitude and profits of his positions “circulated.” Société Générale traders in Asia called Kerviel the “fat one” (le gros) because of his positions. His boss in the trading room knew that he was risking up to €50 billion; emails between his supervisors and “control services” have emerged that discussed his outsized trades—one of them for €17 billion. But none of this was accepted by the court. “Incomprehensible,” Kerviel groaned.
On the plaintiff’s side, it was the opposite. Its “witnesses came and lied,” Koubbi said; and when challenged, the judge said that plaintiff’s witnesses had “a right to lie.” When Koubbi asked one of Kerviel’s supervisors what he knew about his trades, he replied: “I cannot answer that question because if I answered that question, I’d have to pay back the money I already received.” He’d signed a contract with the bank that prevented him from talking about the case. And the judge let it go.
And now, as France24 reports [6], bosses at French banking giant Societe Generale were aware of the activities of "rogue trader" Jerome Kerviel, a top detective working on the case reportedly told an investigating judge, according to Mediapart.
The French investigative news website quoted Nathalie Le Roy as telling judge Roger Le Loire she was "certain" that Kerviel's superiors "could not have been unaware" he was taking wildly risky bets on derivatives.
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"From different hearings and different documents that I've seen, I had the feeling, then I was certain, that Jerome Kerviel's bosses could not be unaware of the positions he was taking," Mediapart cited Le Roy as saying during her hearing.
She cited interviews she herself had carried out with an employee in the operational risk department of Societe Generale, who told her that "Jerome Kerviel's activities were known."
Societe Generale said in a statement it was "surprised" by the report.
"The case surrounding the fraudulent activities of Jerome Kerviel go back now more than seven years and there have been several court decisions which have always shown the sole criminal responsibility of Jerome Kerviel," the bank said.
"Societe Generale is surprised by the declarations apparently made by a police officer to a judge in charge of a case brought by Jerome Kerviel given that he (Kerviel) himself told detectives questioning him in 2008 that he had acted alone and without his superiors' knowledge," added the statement.
The bank also stressed that it did not have access to the legal documents from which these declarations were taken.
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As Bloomberg concludes, [9]managers missed at least 1,071 bogus trades, a special committee of the bank’s board found seven years ago. His supervisors failed to react to the size of his trading gains, cash flows and brokerage expenses, and overlooked warnings from Eurex AG, Europe’s biggest futures exchange, as the former trader amassed his positions, the committee found.
Kerviel has argued at every trial that Societe Generale stealthily sold unprofitable subprime mortgage investments as it liquidated his positions, exaggerating the losses.
