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French Bank trader sentenced for scandal

10-06-2010 08:42 BJT

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A court in Paris has sentenced former Societe Generale trader Jerome Kerviel, to five years in prison. Kerviel made risky trading bets worth 50 billion Euros, bringing the bank to the brink of collapse.

Jerome Kerviel leaves court in Paris - he's been sentenced to 5 years in prison - two of them suspended - for his role in a trading scandal.

The former Societe Generale trader must also pay back 4.9 billion euros to the bank.

The 33-year old was found guilty of breach of trust, computer abuse and forgery.

The judges said even if there were shortcomings at Societe Generale, Kerviel knew what he was doing when he overstepped his role by speculating excessive amounts.

Kerviel's lawyer says he'll appeal and will remain a free man until then.

Lawyer for Jerome Kerviel Oliver Metzner said, "We're going to appeal on the grounds that there was no breach of trust. That everything that was done by Jerome Kerviel was done with the full knowledge of Societe Generale. The banking commission has already condemned Societe Generale, but the court did not consider the consequences of that."

The verdict closes the chapter on a tumultuous time for SocGen.

France's second-biggest bank has worked hard to clean up its image and tighten risk controls since the news broke in early 2008.

The scandal brought the bank to the brink of collapse and a year later cost CEO Daniel Bouton his job.

He admitted there were weaknesses in SocGen's risk controls and it was fined by French banking regulators.

The bank has always claimed that Kerviel acted alone when he made risky bets worth 50 billion euros - which cost 4.9 billion euros to unwind.

David Buik, a senior strategist at BGC Partners, has no sympathy for Kerviel.

David Buik, senior Strategist of BGC Partners said, "That is a catastrophic amount of money and he must have known that he was overtrading his limits, because no dealer, no single dealer would ever be given that authority by any bank, under any circumstances."

Jerome Kerviel has been compared to rogue trader Nick Leeson, who brought down British bank Barings in 1995.

The Societe Generale scandal involved much bigger sums of money - but Kerviel's sentence is shorter than Leeson's six and half years.

The case has also had wide-ranging implications for SocGen and other banks.

Many have worked hard to tighten risk controls to prevent anything like this happening again.

Editor:Zhang Ning |Source: CNTV

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