More On Legal & Compliancefrom The Advisor's Professional Library
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
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.