It may seem like a different world now, but it was about 8 years ago when panicked traders woke up to find a dramatic collapse in overnight futures, which forced the clueless Fed to cut rates by 0.75% on fears that the great selling had started. It hadn't, at least not just yet, and a few hours later it was revealed that the plunge was the result of the action of one solitary "rogue" trader: Jerome Kerviel, who at that time worked for SocGen, Kerviel was later convicted of causing a record trading loss of €4.9 billion at the second largest French bank, Societe Generale.
Then today, in a surprising twist, nearly a decade after his infamous trade, Kerviel won a payout of more than €450,000 in a Paris employment lawsuit over claims he was unfairly dismissed. According to Bloomberg, the award Tuesday includes €100,000 for unfair dismissal and his €300,000 bonus for 2007. The court, however, rejected Kerviel’s multi-billion euro request for more than the underlying loss at the bank.
The employment tribunal verdict is the latest twist in the story of the former trader who has taken equal turns as villain and folk hero since he was blamed for causing the record loss at France’s second-largest lender. The ruling could have an effect on other pending cases that Kerviel has filed in French courts. "Societe Generale can’t pretend it was not aware of Jerome Kerviel’s fake operations" before his dismissal in January 2008, Judge Hugues Cambournac said. The dismissal "didn’t sanction Kerviel’s acts, but its consequences."
However, Kerveil will wait a long time before seeing the award if at all: SocGen has said it will "immediately" appeal the ruling, which includes an order to immediately pay Kerviel 80,000 euros. "It’s a scandalous decision," said Arnaud Chaulet, a lawyer representing Societe Generale.
At a hearing last month, Kerviel’s lawyer, David Koubbi, justified the tit-for-tat demand for compensation by telling the tribunal that it was only fair because the bank had previously pressed for Kerviel to pay back the full trading loss. It was not clear where the solitary trader would have found the billions needed to fill the gap. So while an order requiring him to repay the amount of the trading loss has been overturned, Kerviel’s claims that he wasn’t responsible for the scandal have fallen on deaf ears in French courts.
Several verdicts found Kerviel exclusively guilty for the trading loss, yet he contests the amount of the loss and says Societe Generale should also be held responsible. As Bloomberg adds, the former trader has mounted a fresh legal challenge to his conviction after Nathalie Le Roy, the police officer who led Kerviel probes in 2008 and 2012, expressed concerns last year about how she was pressured to focus solely on evidence that would incriminate him. France’s court of review and reassessment in March indefinitely delayed a decision on the bid for a retrial. Judges said they want to wait for separate lines of inquiry into the use of forged documents, witness subordination and obtaining a ruling under false pretenses to run their course.
Additionally, a civil trial over the amount Kerviel owed Societe Generale is scheduled for June. That amount may end up being well higher than the €400,000 SocGen now owes the former trader.