Jérôme Kerviel (born January 11 1977) is a French trader who has been charged in the January 2008 Société Générale trading loss incident, resulting in losses valued at approximately €4.9 billion.
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Jérôme Kerviel (born January 11 1977) is a French trader who has been charged in the January 2008 Société Générale trading loss incident, resulting in losses valued at approximately €4.9 billion.
Early life
Jérôme Kerviel grew up in Pont-l'Abbé, Brittany. His mother, Marie José, is a retired hairdresser and his father, Charles, who died in 2006, was a blacksmith. Kerviel is married, but he and his wife recently separated.
He graduated in 2000 from University Lumière Lyon 2 with a Masters in Finance specializing in organization and control of financial markets. The university's financial program, which was initiated in the 1990s with the support of France's larger banks, was intended to prepare students for middle and back-office positions in the trading departments of financial institutions.
During an interview, one of his former lecturers at Lyon, Gisèle Reynaud, stated that "He was a student just like the others, a young man, and he didn't distinguish himself from the others."
Société Générale
Kerviel joined the middle office of the bank Société Générale in the summer of 2000, working in its compliance department. In 2005 he was promoted to the bank's Delta One products team in Paris where he was a junior trader. Société Générale's Delta One business includes program trading, exchange-traded funds, swaps, index and quantitative trading. Christian Noyer, governor of the Bank of France, has described Kerviel as a "computer genius"; however, sources within Société Générale described Kerviel as "not a star". Kerviel earned a bonus of €60,000 on top of a €74,000 salary in 2006, considered modest in terms of the salaries paid to traders in the financial markets. He had hoped for a €600,000 bonus for 2007 and would have received at least half that amount.
Fraud allegations
main: January 2008 Société Générale trading loss incident The bank states that Kerviel was assigned to arbitrage discrepancies between equity derivatives and cash equity prices,
Bank officials claim that throughout 2007, Kerviel had been trading profitably in anticipation of falling market prices; however, they have accused him of exceeding his authority to engage in unauthorized trades totaling as much as €49.9 billion, a figure far higher than the bank's total market capitalization. Bank officials claim that Kerviel tried to conceal the activity by creating losing trades intentionally so as to offset his early gains. According to the BBC, Kerviel generated €1.4 billion in hidden profits at the beginning of 2008. His employers say they uncovered unauthorized trading traced to Kerviel on January 19, 2008. The bank then closed out these positions over three days of trading beginning January 21, 2008, a period in which the market was experiencing a large drop in equity indices, and losses attributed are estimated at €4.9 billion.
