Former trader Jerome Kerviel began his fight today against a 2010 conviction for Société Générale SA's €4.9 billion trading loss, telling a Paris appeals court that the bank knew about his actions.
His lawyers said they'll show judges at the four-week appeal starting today that the bank knew before the 2008 trading loss that he was exceeding his mandate with risky bets and can't claim to be an innocent victim.
"I think that I'm not responsible for this loss," Kerviel told judge Mireille Filippini at the start of the hearing today, in response to a question about why he was appealing.
"I always acted with the knowledge" of the bank.
Kerviel's stance is similar to the defense he used with his previous legal team when the court held him responsible, sentenced him to three years in jail and ordered him to repay the loss.
Those arguments aren't likely to impress the appellate judges, said Stephane Bonifassi, a Paris criminal lawyer.
"What courts like to hear, if they think a guy is guilty, is that he understands what he did," said Bonifassi, who isn't involved in the matter.
"Here, it's a guy who says, 'It's not my fault, it's other people's fault.' He still hasn't accepted what happened." Kerviel's defenders say he will own up to his actions and the appeal won't recycle the lower court defense.
Kerviel "is ready to take responsibility for what he did, but he will never accept the blame for what he didn't do," said David Koubbi, his lead lawyer.
Kerviel "is guilty of nothing" as the case rests on him betraying the trust of the bank.
When asked by Filippini about how the bank monitored his activities, Kerviel said today he and others exceeded their limits "very, very regularly," and that he would receive e-mails in the morning alerting him when he was beyond the lines.
Claire Dumas, a risk-management official at the bank, said that the lender's policy was to display trust in traders.
"Confidence is important," Dumas said.
Traders are expected to voluntarily disclose to their boss when they are outside their limits and to return within the lines. In "99.99 percent" of cases, traders self-report and return within bounds.
Paris prosecutors began preliminary inquiries in May into claims the bank misled the lower court by hiding a nearly €1.7 billion tax credit on the loss and gave investigators an audio recording that had been tampered with.
An inquiry into the defamation complaints Société Générale filed in response is also under way.
The bank reported it got a deferred tax credit on the loss in August 2008. Further, in its defamation filings, Société Générale said it gave the court an account detailing the calculation of the loss, and said the recording was encoded and impossible to have been cut as Koubbi claimed.
Kerviel, now 35, was found guilty of breach of trust, forging documents and computer hacking.
He amassed €50 billion in unauthorized positions concealed with faked hedges.
A bank board-commissioned report found his supervisors failed to "react in an appropriate manner to several alert signals" and missed at least 1,071 bogus trades.
Kerviel changed legal teams four times since the January 2008 loss, reiterating what he said from the start that he feared being made a "scapegoat" for what he said was a common practice of evading risk controls and exceeding limits.
Bloomberg
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