Rogue French trader appeals fraud conviction

A French trader sentenced for covering up tens of billions of dollars in bets and ordered to reimburse his bank for the resulting losses told a court Monday that his bosses were aware of but overlooked his enormous trades.

Jerome Kerviel, sentenced in 2010 on charges of forgery, breach of trust and unauthorized computer use, claims that Societe Generale only cried foul when his trades lost money.

The bank, France's second largest, has said Kerviel acted on his own as he masked the fact that he had made bets worth nearly €50 billion — well beyond the amount authorized for one trader — between late 2007 and early 2008. The bank says it cost €4.9 billion — around $7 billion at the time — to unwind those trades.

Kerviel was ordered to pay that same staggering sum back to the bank as part of his sentence — an order that drew gasps from the courtroom. He was also sentenced to three years in prison but was set free pending the appeal.

The 35-year-old former trader looked calm as he entered the courtroom Monday. He later told the court that he shouldn't be held responsible for his losses.

He said that he "had always acted with the full knowledge of the bosses."

Kerviel said he was aware of the limits placed on his trading — and that his desk received an email each morning laying out any breach.

But "we were very regularly beyond the limit," he said, explaining that the limits seemed to have been deactivated. "The head of my desk never said anything to me when the limit was broken."

Claire Dumas, the deputy head of the risk department at the bank, however, disputed that the trading limits were regularly broken.

"Trust is very important," she said. "In 99.9 percent of cases, (traders) tell us when they are beyond their limits."

Not only does Kerviel contend that his bosses were aware of his actions, but he also accuses the bank of manipulating some of the evidence used to convict him to hide that fact. He says that a section of an audio recording on which he stated the bank was in the loop had been tampered with. In April, he filed a lawsuit against the bank for obtaining a verdict under false pretenses.

"We will explain that the bank knew and when they knew," Kerviel's lawyer, David Koubbi, said recently. "Mr. Kerviel has the sad distinction of the most harshly sentenced man in the world."

The bank has denied tampering with the recordings.

Kerviel also disputes the amount that Societe Generale lost, saying it has recouped some of the €4.9 billion.