French rogue trader Kerviel launches appeal
PARIS (Reuters) - Ex-trader Jerome Kerviel began his appeal on Monday against a three-year prison sentence for his role in France's biggest rogue trading scandal, arguing he was not responsible for a 4.9 billion euro (3.96 billion pounds) loss at banking group Societe Generale.
Wearing an open-necked white shirt for his court appearance and showing little emotion, Kerviel hit back at SocGen over the 2010 conviction that held him responsible for massive, risky bets uncovered in 2008.
The 35-year-old trader claims his superiors knew what he was doing. SocGen denies any part in the trades.
"I am not responsible for this loss ... I always behaved according to rules set by my superiors," Kerviel said in court in Paris.
At stake for SocGen is whether magistrates will once again exonerate the bank of any responsibility for Kerviel's massive trading positions, which dealt a big blow to its reputation and forced it to raise capital.
Kerviel portrayed SocGen as having imposed little oversight on its traders, saying he was never told what his official remit was and that his desk regularly flouted its 125 million euro limit.
"My mandate was to make money for the bank," he told the court.
Kerviel also said he had signed, but not read, a book of guidelines for traders at the bank, saying: "It was worthless."
SocGen's representative in court said his roles in market-making and arbitrage were clearly defined and that individual traders were responsible for staying within their limits.
The presiding judge, who reproached lawyers on both sides when they attempted to veer off her chosen path of inquiry, grilled Kerviel on whether he felt there were limits to his risk-taking.
The ex-trader said not only were his desk's limits "informal" but that in 2005, after masking risky bets with fictitious trades and getting caught, he was rewarded by superiors with a higher trading limit.
"What a heavy punishment - they hiked my trading limit," said Kerviel.
SocGen representative Claire Dumas told the court his superiors may not have known the extent of his fake trades and said that nonetheless the fact they reprimanded him was not "banal".
SocGen counsel Jean Veil told reporters during recess: "I have the impression Kerviel is saying exactly the same thing he said in his trial... I note, however, that he admits he never went to his superiors to admit to them of the massive, masked trades he took."
Armed with new counsel David Koubbi - known for defending high-profile celebrity clients such as actress Isabelle Adjani - Kerviel has gone on the offensive ahead of his month-long appeal, filing two lawsuits accusing SocGen of obtaining a verdict under false pretences and of tampering with evidence.
The fresh allegations, which SocGen has denied and has responded to with countersuits for defamation, seek to shift the focus back on to the bank by accusing it of concealing information - such as its tax write-off on Kerviel-related losses - and of responsibility for alleged "blanks" on tapes used as evidence.
Kerviel was not questioned on these allegations during the appeal's opening session.
"We will seek acquittal, there's no mystery about that," Koubbi told reporters during recess. He dismissed SocGen's testimony as "false".
The reappearance of Kerviel is the latest reminder of the potential costs to banks of risky trading activity, coming after JPMorgan recently announced a $2 billion trading loss. Such events have encouraged regulators on both sides of the Atlantic to cast a sharp eye on bank practices.
The other shadow looming over the sector is political. With France's new Socialist government threatening to separate banks' risky activities from their retail operations, French banks have been insisting they do not do overly risky proprietary trading.
The Kerviel appeal may end up strengthening the view that regardless of whether trades are for clients or for the banks themselves, there needs to be tougher regulation and more protection for consumers, analyst Christophe Nijdam at equity research firm Alphavalue said.
"This case offers more grist for the new president's mill," he said. "If it's not possible to protect a bank from this kind of trading fraud, it becomes even more urgent to separate this activity from retail banking.
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