More On Legal & Compliancefrom The Advisor's Professional Library
- Whistleblowers A whistleblower is any individual providing the SEC with original information related to a possible violation of federal securities law. The Dodd-Frank Act established a whistleblower program that enables the SEC to reward individuals who voluntarily provide such information.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
The 2010 verdict by a French court finding Jerome Kerviel solely responsible for Société Générale's trading losses of 4.9 billion euros ($6.34 billion) in 2008 was upheld Wednesday by a Paris appeals court.
Bloomberg reported Wednesday that the decision by Judge Mireille Filippini upheld the earlier verdict, which found that Kerviel was guilty of abusing SocGen’s trust, faking documents and entering false data into the computers.
Kerviel had argued that the bank was aware of the actions he took beyond his authority, and further, was scapegoating him for its 2008 subprime mortgage market loss—one of the largest in history. The loss was so massive that it obliterated nearly two years of pretax profit at the bank’s investment banking unit.
In his quest for exoneration, Kerviel changed his defense lawyers and even filed criminal complaints against SocGen prior to the appeal hearings. As the appeal went forward, his lawyers asserted that the bank had used Kerviel, letting him make unauthorized trades to hide its jeopardy from the subprime mortgage market in the U.S.
In response, SocGen charged defamation and the judge actually argued openly with Kerviel’s lawyer, David Koubbi. At one point, citing his treatment of witnesses, the judge threatened him with action from the bar association.
Koubbi was quoted saying after the ruling was issued, “We strongly defended Jerome Kerviel and despite the new elements that we brought forward, nothing changed their mind. We will continue to defend him against what has been a great injustice.”
The prosecution asked Filippini to raise Kerviel’s sentence from the three years cited in the 2010 verdict to the maximum of five years.