Société Générale Fraud Case Reaches Courts

PARIS, June 8, 2010 -- For the $6 billion alleged rogue trader Jérôme Kerviel, the time has come to face justice.

The long-awaited trial of the former French trader accused by his former employer Société Générale of nearly $6 billion in losses in 2008 started today in Paris. Despite the presence of numerous gendarmes, Kerviel and his five lawyers made their way with difficulty through a sea of microphones and cameras to reach the the Paris courtroom. More than 200 journalists from around the world came to cover the first day of the trial.

"We hope transparency will prevail, that the truth will not be obstructed by the Société Générale," Olivier Metzner, Kerviel's lawyer, told reporters while struggling to make his way to the courtroom. Kerviel closely followed his step and did not make any statement.

The 33-year-old former trader, once called a "terrorist" by his former boss, is charged with breach of trust, forgery and the use of forgeries and fraudulent introduction of data in a computer system. Kerviel is facing five years in jail and a $450,000 fine if convicted.

On Jan. 24, 2008, the head of the Société Générale himself, one of Europe's largest banks, announced to the world that the bank had suffered a massive fraud.

"We have discovered the existence of a concealed position, completely hidden, external to our books but housed within our field of market activity," Chairman Pierre Bouton said, during a news conference at the bank's headquarter outside Paris.

The fraud almost led the bank to collapse, but it was able to recover after raising 5.5 billion euros (close to $6.6 billion today) in fresh capital to strengthen its balance sheet. The bank claims that Kerviel gambled tens of billions of dollars of Société Générale's money in outrageous secret trades that led to 4.9 billion euros (close to $6 billion today) in losses once the bank concluded unwinding Kerviel's positions in January 2008.