Jerome Kerviel
Candlefocus EditorKerviel was the head trader for the bank’s Equity Derivative Division and conducted false trades beyond his trading limits. To cover up his gains from the false trades, Kerviel offset his bets with bogus trades with the opposite position. Moreover, he manipulated the books of the bank and created fake trades. Eventually, the bank suffered losses of €4.9 billion euros due to Kerviel's unauthorized trades.
The case greatly divided public opinion in France. Some people felt sorry for the young trader and identified with his plight. Public opinion was also highly critical of the banking industry, questioning the ethics and motivations of the industry.
In 2010, Kerviel was sentenced to three years in prison and ordered to pay the bank the full amount of €4.9 billion. This ruling was later reduced to a €1 million fine, and Kerviel was also forced to return all profits that he had made in his trading.
Kerviel has since been released from prison and returned to work as a computer technician. He has become somewhat of a celebrity, writing a book about his experiences in prison and being interviewed on talk shows about his experiences with rogue trading.
The case of Jerome Kerviel remains one of the most well-known cases in the banking world. His actions led to massive losses for the bank and the banking industry as a whole. Although his actions were clearly criminal, his story is an example of the vulnerability of banks to massive losses due to lack of financial regulations, lack of corporate oversight, and inadequate internal controls. Kerviel’s case serves as a powerful reminder of the importance of robust regulation and internal controls in the banking sector.