SocGen, La Banque Clown | FT Alphaville

SocGen, La Banque Clown

Dominique Pauthe, who led the three-judge panel in Paris deciding on the guilt of Jérôme Kerviel, has made his court a laughing stock by meeting prosecution demands that this country boy from Brittany “repay” the €4.9bn Société Générale lost in this comical rogue trader scandal.

Sure, no one actually expects Kerviel to come up with the cash — although given that he was enterprising enough to string together €50bn worth of unauthorised trades at SocGen without being detected, we shouldn’t rule that out.

The real farce here, of course, is that SocGen executives can actually claim that this somehow vindicates their actions, or lack thereof. If you were running a bank where some junior trader could secretly wager 10 times the bank’s market value, you shouldn’t be running a bank any more.

And you should be open to legal retribution from those who lost money — which is where this case gets murky. In lumping all the blame on Kerviel, the judgement in Paris on Tuesday would seem to make it all but impossible for related class action lawsuits to be pursued through the American courts.

The French courts, meanwhile, don’t seem to offer an alternative remedy.

A poor show all round.

Related links:
Did Socgen use ETFs to liquidate Kerviel positions?
– FT Alphaville
Kerviel’s cash positions
– FT Alphaville
What is it with SocGen types and alleged market abuse?
– FT Alphaville