Jerome Kerviel, who was convicted of causing a record 4.9 billion-euro trading loss at Société Générale, won more than 450,000 euros in compensation as a Paris judge berated the lender for its role in the affair, reports Bloomberg.
The 455,500-euro ($517,000) award Tuesday includes 100,000 euros for unfair dismissal and his 300,000-euro bonus for 2007. Judge Hugues Cambournac questioned some of the bank’s defences since the scandal first emerged nearly a decade ago.
"Societe Generale can’t pretend it was not aware of Jerome Kerviel’s fake operations" before January 2008, Cambournac said. The dismissal "didn’t sanction Kerviel’s acts, but its consequences."
The employment tribunal verdict is the latest twist in the story of the former trader who has taken equal turns as villain and folk hero since he was blamed for causing the record loss at France’s second-largest lender. The ruling could have an effect on other pending cases including a trial over damages set to begin in Versailles next week.
While Cambournac rejected points made in the bank’s favour in previous rulings, he threw out Kerviel’s multi-billion-euro compensation request for more than the net loss incurred by the bank.
The bank will "immediately" appeal the ruling, which includes an order to pay Kerviel more than 80,000 euros upfront. "It’s a scandalous decision," said Arnaud Chaulet, a lawyer representing Société Générale.
In his ruling, Cambournac said Société Générale knew about Kerviel exceeding his trading limits since at least April 2007 through several alerts and in November that year, the bank got a Eurex alert about Kerviel’s “substantial” positions on Allianz SE.
Société Générale "tolerated" Kerviel’s acts and it can’t use the argument of a fault from the trader to dismiss him in February 2008, the judge said.
Furthermore, Societe Generale didn’t explain how Kerviel’s trades in excess of the 125 million-euro limit didn’t reduce trading capacity for other staff at his desk, according to the ruling. The bank also failed to justify that "only Mr. Kerviel exceeded this limit, and that any other trader never exceeded these limits."
Kerviel’s performance goals quadrupled to 12 million euros between 2005 and 2007, and his outsized results weren’t challenged, the ruling says. Kerviel in November 2007 had a "very positive" evaluation, according to the ruling, citing a senior manager.
Société Générale confirmed that Kerviel’s earned the bank 1.4 billion euros to 1.5 billion euros in 2007, according to the verdict.
At a hearing last month, Kerviel’s lawyer, David Koubbi, justified the tit-for-tat demand for compensation by telling the tribunal that it was only fair because the bank had previously pressed for the 39-year-old to pay back the full trading loss.
While an order requiring him to repay the bank has been overturned, Kerviel’s claims that he wasn’t responsible for the scandal have fallen on deaf ears in French courts.
Several verdicts found Kerviel exclusively guilty for the trading loss, yet he contests the amount of the loss and says Société Générale should also be held responsible. The former trader has mounted a fresh legal challenge to his conviction after Nathalie Le Roy, the police officer who led Kerviel probes in 2008 and 2012, expressed concerns last year about how she was pressured to focus solely on evidence that would incriminate him.
France’s court of review and reassessment in March indefinitely delayed a decision on the bid for a retrial. Judges said they want to wait for separate lines of inquiry into the use of forged documents, witness subordination and obtaining a ruling under false pretenses to run their course. This month’s civil trial concerns the amount Kerviel owed the bank.
Bankers routinely turn to specialist labour courts throughout Europe in a bid to recoup lost bonuses and rehabilitate tarnished reputations. Many of the cases involve former traders who lost their jobs in the wake of the Libor and foreign currency rigging scandals.