Soc Gen: Rogue trader Kerviel will not have to pay full fine

Banking giant considers more realistic penalty for former computer technician

Societe Generale has said it will not call on former trader Jerome Kerviel to pay the full 4.9 billion (£4.3 billion) fine handed down to him by a Paris court on Tuesday.

Kerviel was this week ordered to pay the fine after being found guilty by the Tribunal Correctionnel of unauthorised computer use, forgery and breach of trust. He was also handed a three-year prison sentence.

The trader, who has an advanced knowledge of IT, had circumvented the bank's security controls and made a series of unauthorised transactions, costing it billions of Euros.

Kerviel's lawyer has said he will appeal the court's judgement. If this appeal fails it is understood that Societe Generale may attempt to carve out a payment plan for a much smaller amount. It is not known how the judge would respond to this suggestion.

A spokesperson at Societe Generale told Computerworld UK that the bank "respects" the judge's decision, but added that "one person can't be expected to pay that sum".

The former trader, now 29 years old, currently earns around £2,000 a month working for a computer services firm, and has been banned for life from trading. It has been calculated that with salary increases and any personal investment payouts, he would need to live and work for 120,000 to 170,000 years to pay the sum - meaning that in reality it could take thousands of generations of his family to pay the sum.

Kerviel had become somewhat of a cult figure in France, with supporters selling T-shirts bearing his photo and saying he had been made a scapegoat in a system that demanded he took large risks to make money. Kerviel himself has always maintained the bank knew of his trades and turned a blind eye when he was making money.

He had previously worked in the bank's IT department, and so had in-depth knowledge of its systems and procedures. Among the tricks Kerviel used to hide his activities, according to an internal report at the bank, was his use of fake e-mail messages to justify missing trades, and borrowing of colleagues' log-in credentials to conduct trades in their name.

Societe Generale spent 130 million between 2008 and 2009 to strengthen its systems and controls. But in August this year, it was fined £1.6 million by the UK Financial Services Authority for failures that meant it was inaccurately reporting four in every five of its transactions.

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