

Ex-French trader must pay $6.7 billion for fraud - edw519
http://news.yahoo.com/s/ap/20101005/ap_on_bi_ge/eu_france_trader_on_trial

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danielnicollet
I am from France and have friends working at Societe Generale. For those
interested in the case, the big question is not why Kerviel was condemned to
pay a fine he will clearly never pay but why his boss and execs from the bank
were never bothered. How could they say that they ignored a few single very
risky fraudulent trades had generated the bulk of the billions in profits they
made during two years prior to the blow up of the affair?!

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randomtask
Comment on dit "scapegoat" en Français?

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guylhem
bouc-émissaire.

Official apology : we didn't know what he did. It's hard to believe no-one
knew what was happening. If they are that incompetent, it may be wise to use
competitors.

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chegra
I'm ok with everything here, except why wasn't his bosses charged?

74 Alarms triggered and no one said anything or did anything. I'm more
inclined to believed that they were happy when he made money but also would
not be taking the blame if it went sour, which it did.

They effectively looked the other way that is my only conclusion.

Yea, I know someone is going to say don't attribute to malice what can be
explain with incompetence, but it is hard for me to believe that they didn't
know and just looked the other way.

In my opinion, his bosses should be culpable.

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T_S_
The only real story here is whether the sentence would hint at criminal
culpability by bank. It didn't, but they weren't actually on trial. The bank
already got fined for lax controls by the regulator--a civil matter, but they
were not left unpunished. The trader will never pay restitution, cannot be
jailed for that, and everybody including the court knew that.

People always waste energy wanting to demonize or glorify when they should
analyze. It is not hard for me to believe that bank managers could be clueless
rather that criminal. Let's hear one suggestion that will prevent such cases
in the future.

This case strikes me as similar to the Joe Jett/Kidder Peabody case a few
years earlier. Self-deluded trader, weak accounting system, lax controls,
clueless manager. Result: A big loss that destroyed the bank. Banks have far
more privacy in their financial life than individuals. I think we need to
rethink how well closed information systems (like a bank) serve us as
individuals and society.

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yummyfajitas
_Let's hear one suggestion that will prevent such cases in the future._

Banks already listened to many suggestions and implemented them back in
2008/2009.

One very well known example, which wasn't specific to any individual bank:
every US bank now has 2 contiguous weeks of _mandatory_ vacation (i.e.,
someone not under your control will be managing your books for 2 weeks).

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nphase
How is he Ex-french? Was his nationality stripped from him? That would be a
bit of a insult after injury, wouldn't it?

Shouldn't it be "French ex-trader"?

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danielnicollet
Funny mistake. The French (led by President Sarkozy) are actually talking
about stripping nationality from certain types of criminals. See:
[http://www.france24.com/en/20100730-sarkozy-looks-strip-
citi...](http://www.france24.com/en/20100730-sarkozy-looks-strip-citizenship-
threaten-security-forces-french-immigration) I am a Franch-American dual
national, maybe I will be just American after making this comment... Liberté,
égalité, fraternité! ;-)

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frisco
I'm confused by this title. Was being kicked out of France part of his
punishment, but he's still a trader? Or is he a French ex-trader? This could
be rephrased for clarity.

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bambax
Ex-(French trader).

This ruling is crazy (pay back everything (how??) and go to prison for three
years). I very much doubt it can stand on appeal.

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randomtask
I don't get why the parent was downvoted. Since when does HN get up in arms
about grammar nazis? ;) The term "Ex-(French trader)" implies that he could
now be, for example, a German trader. I think the proper nomenclature should
be "French ex-trader" with the "ex-" prefix being most tightly bound to the
thing that the subject was formerly. I may well be wrong about that and I'm
fully willing to accept the consequences of the Law of Prescriptive
Retaliation. :)

<http://languagelog.ldc.upenn.edu/nll/?p=337>

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agravier
This nonsense ruling allows the bank to avoid responsibility.

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tfh
This is the message the french court is giving: _"As long as you make money,
risk taking is ok. If you screw up, it's your fault. You pay everything
back."_

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demallien
Which is not a bad thing, in my opinion. One of the structural problems that
the global financial crisis has revealed is that financial institutions take
risks with other peoples' money. If the gamble works, they get a good slice,
if it doesn't they don't have to pay anything. It would appear that the French
government is opting for gaol time and enormous fines to make individual
traders act responsibly, even when their employer refuses to. This is not a
bad idea, it makes people self-governing, rather than having a government
organisation trying to run audits on companies and detecting how their best
accountants have cooked the books.

~~~
tfh
_> It would appear that the French government is opting for gaol time and
enormous fines to make individual traders act responsibly, even when their
employer refuses to._

It's difficult enough to find a job as a trader now. The banks would simply
choose the traders with the most risk taking potential. I personally think
it's a step in the wrong direction. It's the employer who has to be made act
responsibly, not the individual traders.

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kevinelliott
Wait, so he's been charged $6.7 billion, and "no one realistically expects him
to pay it" ... "it's more symbolic"

Hogwash. I smell foul play. How would a $6.7 billion fine prevent people from
doing this any more than $100 million? They made this number big so that the
PUBLIC would see it and think "yay, someone has taken responsibility for it
all" but allows the bank to get away scot free. He was definitely a fall guy.

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adulau
Usually in the banking sector, it's not uncommon to have a private agreement
before going into court case. Especially when this is a mutual benefit between
the employee and the employer (the bank). As the "fraud" within the bank has
always a negative impact on the bank's credibility (a key factor for operating
a bank), a private agreement is usually better for everyone.

But the period was bad for the trader, Société Général was in a bad shape due
to their subprime losses. So it was easier for SG to charge the insider trader
than willing to find an agreement. Especially that would cover the current
subprime losses as not originating (even if the banks lacks controls or
auditing) from the bank itself but more from the "evil" trader.

The surprise is now more coming on the judgment itself where the internal bank
operation was not deeply analyzed. If you are old enough, you may remember the
Crédit Lyonnais fire in Paris destroying the whole archive in 1996. Maybe the
appeal would go more in the archive of SG and re-balance a bit the judgment...

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known
Govt is not smart enough to monitor day-to-day illegal & immoral activities of
big corporations. It is better to breakup these corporations into smaller
entities to promote competition and solve unemployment crisis.

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anigbrowl
Perhaps, but Bernie Madoff managed to steal an enormous sum despite having a
tiny firm. Various hedge fund disasters also started small.

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lefstathiou
What a joke. How could they not realize that this ridiculous ruling gives the
impression that the courts arent taking themselves, the law or society
seriously?

They could have slapped him with a million dollar fine or something along the
lines of 5-7 years worth of income to make everyone start paying attention.

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anigbrowl
Everyone seems to be paying attention now. It's a reflection of the damage he
did, not his ability to pay.

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Timothee
Couldn't one argue that the 5 billion euros lost were lost only because the
Société Générale execs sold everything when it was discovered? Had it been
"discovered" (or acted upon) at the right time, I suppose it could have made
the bank the same amount of money.

