SocGen rogue trader Kerviel's liability cut to 1 million euros

Fri Sep 23, 2016 12:44pm EDT
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By Chine Labbé and Maya Nikolaeva

VERSAILLES, France (Reuters) - Former Societe Generale (SOGN.PA: Quote) trader Jerome Kerviel is liable for only 1 million euros ($1.12 million) of the 4.9 billion euros in losses he racked up at the bank, and not the whole amount, a French court ruled on Friday.

The ruling by the Versailles Court of Appeals, the latest in a series of judgments on a case dating back to 2008, leaves a question mark hanging over whether the government can reclaim the 2.2 billion euros of tax reliefs which SocGen obtained against the losses if Kerviel was not held wholly liable.

Industry analysts have said that would put its dividend at risk and affect its capital adequacy ratios.

Kerviel was sentenced to three years in prison after being convicted by a Paris court in October 2010 for breach of trust and fraud over the losses caused by disastrous trades in equity derivatives.

Initially he was ordered to repay the total amount of losses incurred by SocGen, but subsequent rulings struck down that decision, and in June a public prosecutor said the bank "had left the door open" for Kerviel to act illegally.

The Versailles court, charged with deciding how much Kerviel should actually be liable for, agreed broadly with that view.

Kerviel did indeed commit fraud, it said. But it added:

"Multiple errors committed by the bank played a major and determining role in the causal processes behind the very significant harm that was done to it.   Continued...

Former trader Jerome Kerviel (L) and his lawyer David Koubbi stand inside the courthouse in Versailles, France, September 23, 2016.  REUTERS/Charles Platiau