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France top court jails 'rogue trader' Kerviel, overturns fine

France's highest appeals court on Wednesday sentenced former trader Jerome Kerviel [BBC backgrounder; JURIST news archive] to three years in prison for fraudulent covert trading while working for French bank Society Generale (SocGen) [corporate website, in French]. The Court of Cassation [official website, in French] upheld two lower court verdicts that determined that Kerviel acted without the bank's knowledge in building up positions of around €50 billion that brought the bank to the brink of collapse in the midst of the 2008 financial crisis. However, the Court overruled the €4.9 billion (USD $6.82 billion) in civil damages Kerviel was meant to pay SocGen to compensate for the bank's losses. A new civil trial will take place to decide on the eventual damages. The large fine essentially meant that SocGen could have had a lifetime claim on Kerviel's income, and was met with an outcry from the public and politicians who believed it excessive. Kerviel, who has spent three years trying to overturn his conviction, does not deny masking the 50 billion euro positions but accuses SocGen of knowing what he was doing.

Kerviel was originally convicted in 2010 [JURIST report], and was retried in 2012. Kerviel was detained [JURIST report] in February 2008 as the investigation into the fraudulent trades was conducted. He was released in March 2008 [JURIST report] but instructed not to leave the country or communicate with a number of former colleagues. Police also questioned a second trader in connection with the fraudulent trades, but the man has since been named an assisted witness [JURIST reports] in the case against Kerviel, a designation that allows him to testify in the presence of a lawyer.

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