A French appeals court has cut the amount of damages owed by trader Jerome Kerviel to his former employer Societe Generale to a million euros.
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In a civil case, Kerviel was first ordered to pay for the entirety of the enormous losses but that was quashed on appeal, with judges ruling that the bank’s internal oversight mechanisms had failed.
The 39-year-old was originally sentenced to three years in prison for fraud, breach of trust and forgery – a decision upheld in 2014.
The ruling by the Versailles Court of Appeals means the government could reclaim a 2.2 billion euro ($2.47 billion) tax break that SocGen benefited from, a move industry analysts have said would put its dividend at risk and hurt its capital ratios.
Kerviel has said his managers were aware of his risky operations, which had initially earned the bank 1.4 billion euros ($1.6 billion) in 2007, weeks before turning sour in early 2008.
The lawyers for Societe Generale have said Kerviel used his computer, financial skills and fake documents to hide his unauthorized trading from managers.
The case “used to be about 4.9 billion euros”.
But if it rules that Kerviel does not have to pay anything, it will be a humiliating defeat for Societe Generale.
“There is now an acknowledgement – more or less explicit – that the bank Societe Generale was also responsible for the losses incurred by its former trader, because of its lack of effective controls”, he added.
However, the court also found “deficiencies” in the bank’s security thus limiting Kerviel’s liability.
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New court episodes are expected in Kerviel’s legal saga, which has captured the national imagination.
