Market Overview

French Trader Will Find Out Soon If He Owes $5.5 Billion

French Trader Will Find Out Soon If He Owes $5.5 Billion

Jérôme Kerviel, a former trader for the Paris-based bank Société Générale, made headlines in 2008 when he piled up billions of dollars of losses.

Kerviel has already been found guilty of forgery, breach of trust and fraudulent computer use when he attempted to hide risky and dubious investments worth 50 billion euros. He was initially ordered to pay the bank 4.9 billion euros ($5.5 billion), which represents the total losses report by the bank in the fraud.

According to the New York Times, an appeals court in France will soon rule to uphold, quash or cut the penalty.

In 2014, France's highest court annulled the 4.9 billion euro civil damages, but the top court has now ordered a new civil trial.

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Kerviel previously argued that the bank illicitly approved of unauthorized and risky trades, which initially earned the bank 1.4 billion euros ($1.6 billion) in profit in 2007. However, when the bets turned sour in 2008, the bank threw him under the bus.

France's court also found that Société Générale "failed to carry out hierarchical control," which allowed Kerviel to place unauthorized and risky trades. In addition, the court concluded Kerviel never sought to get rich for himself.

With that said, the French government bailed out Société Générale to cover some of the losses through a tax credit. If the bank is found responsible for playing a role in the unauthorized trades the government could ask the bank to pay back the tax credits which may have been up to 2.2 billion euros ($2.5 billion).

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