INTERNATIONAL: Kerviel’s Costly Bet: From Trader to World’s Poorest
Humble Beginnings in Brittany
Born in 1977 in Pont-l’Abbé, France, Jérôme Kerviel hailed from a modest family, with his mother a hairdresser and his father a blacksmith. Despite financial constraints, he pursued higher education, earning a master’s in finance from Lumière University Lyon 2 in 2000.
Rise at Société Générale
Kerviel joined Société Générale in 2000, starting in the compliance department before transitioning to a junior trader role in 2005. His self-taught expertise in trading and IT systems earned him managerial trust, granting him operational leeway.
Unauthorized Trading Scheme
From 2006 to 2008, Kerviel executed unauthorized trades exceeding €50 billion, surpassing the bank’s market capitalization. He concealed these with fictitious transactions, initially reaping profits but exposing the bank to catastrophic risks.
Financial Catastrophe Unveiled
In January 2008, amid a global financial crisis, Société Générale uncovered Kerviel’s trades, revealing a €4.9 billion loss. The bank’s rapid unwinding of these positions over three days exacerbated the financial damage.
Legal Repercussions
Kerviel faced charges of breach of trust, forgery, and unauthorized computer use, leading to a 2010 conviction with a five-year sentence, two years suspended. Initially ordered to repay €4.9 billion, this was later reduced to €1 million in 2016.
Defense and Public Perception
Kerviel maintained that his superiors were aware of his actions, alleging he was scapegoated. His 2014 pilgrimage from Rome to Paris, protesting financial market tyranny, shifted some public sympathy in his favor.
Judicial Turnaround
In 2016, a French labor court ruled Société Générale’s dismissal of Kerviel unfair, awarding him €450,000 for wrongful termination. The Supreme Court also overturned the €4.9 billion restitution, citing the bank’s oversight failures.
Current Life and Legacy
Now working as an IT consultant, Kerviel leads a low-profile life in Paris. The scandal remains a stark reminder of the vulnerabilities in financial systems and the consequences of unchecked risk-taking.