PARIS — France's highest court upheld Wednesday a prison sentence for one-time rogue trader Jerome Kerviel but threw out the 4.9 billion euros ($7 billion) in civil damages he'd been ordered to pay back.
Kerviel was convicted in 2010 of carrying out one of the biggest trading frauds in history that almost took down his bank, Societe Generale, with 4.9 billion euros in losses. He sees himself as a victim of a system that turned a blind eye to his illegal trades as long as they made money for the bank.
Kerviel had appealed the sentence of three years in prison, which had already been upheld once before by a lower appeals court.
In a statement, the high court said Wednesday that the lower court decision had not taken into account faults committed by Kerviel's former employer, French bank Societe Generale, when it ordered ordered Kerviel to repay the bank's entire losses in the fraud.
Kerviel is currently in Italy, walking back to Paris on a pilgrimage after meeting the pope. Television images showed him wearing a red jacket and red backpack, walking swiftly and trying to ignore the numerous journalists trailing him. He made no statement.
Outside the courtroom in Paris, Kerviel's lawyers claimed a partial victory.
"The errors of Societe Generale were at the heart of the concerns expressed by the judicial system, and it appears at the least surprising to lock up Jerome Kerviel when the existence of significant errors on behalf of his employer — and the consequences of these errors on events attributed to him — were affirmed," said Patrice Spinosi.
The high court ordered the civil damages to be retried by an appeals court in Versailles.
The bank's lawyer Jean Veil said that in the new trial the bank will explain that they knew "from the moment that these events were discovered, that there were errors in our system, which we've repaired and spent hundreds of millions to be able to change our control system."
The appeals court had upheld the October 2010 conviction of Kerviel for forgery, breach of trust and unauthorized computer use for covering up bets worth nearly 50 billion euros — more than the market value of the entire bank. It sentenced him to a five-year prison term — with two years suspended — and ordered he pay 4.9 billion euros in damages.
An internal report by the bank, however, found managers failed to follow up on 74 different alarms about Kerviel's activities.
Banned for life from working in the financial industry, Kerviel was making 2,300 euros a month ($3,150 at the time) as a computer consultant after leaving the bank. Societe Generale had paid him less than 100,000 euros a year ($155,700) with bonuses, a modest sum for the 1.4 billion euros in profits he earned for the bank in 2007.
A few of the bank's executives resigned in the scandal's aftermath, including longtime Chairman Daniel Bouton. Kerviel's superiors were questioned in the probe, but none of them faced charges.
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Follow Greg Keller on Twitter at https://twitter.com/Greg_Keller
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