Jerome Cerviel (Societe Generale trader) is a French stock trader (broker) who worked for the investment company Societe Generale and was found guilty of a $ 7.2 billion trade loss in 2008. Jerome was also accused of exceeding his authority. History is surprising in that an ordinary worker, whose salary is not more than 100 thousand euros per year, brought a loss of 4.9 billion euros. Societe Generale Investment Bank trader Jerome Cerviel is described as a scammer who worked on a financial exchange without permission for certain trades.
The story became known to the whole world, because this case was almost the first in the world history of exchange trading, when an ordinary broker takes almost all banking funds into circulation. Around this case revolves a lot of opinions. Some think that this is indeed a serious oversight, others say that this is a deliberate fraud, while others hold the opinion of a worldwide conspiracy and the like.
In May 2010, Cerviel issued a book of his own authorship, entitled L'Engrenage: Memoires d'un trader ("Spiral: Trader's Memoirs"). In it, he tells about the small details of that memorable incident. In the book, the author claims that the authorities had control over his trading activities, and that similar trading practices were common in the bank. Accordingly, the story of the collapse of Jerome Cerviel and the investment bank Societe Generale itself is the fault of everyone, not just one employee. Jerome describes the events in his book in this way. It’s not possible for ordinary people to know who is right.
Jerome Cerviel: biography, early life
Born on January 11, 1977 in the French city of Pont-l'Abbé (Brittany). His mother, Marie-Jose, was a hairdresser in a beauty salon, and his father, Charles, worked all his life as a blacksmith (he died in 2007). Cerviel has an older brother Olivier.
In 2000, Jerome Cerviel graduated from the graduate school of Lumviere Lyon 2 with a degree in Organization and Control of Financial Markets. Prior to this, Jerome received a bachelor's degree in finance from the University of Nantes.
During an interview, one of the former teachers of the University of Lyon said that Cerviel was a simple student, not distinguished by any originality from others. He was an assiduous student who studied finance with great interest, was not distracted by girls and alcohol. In 2001, at the suggestion of Thierry Mavic (Mayor of Pont-l'Abbe), Cerviel ran for the city elections of Pont-l'Abbé from the center-right UMP party, but was not elected. As Thierry Mavik himself later commented, Cerviel did not have enough sincerity to win: he was too reluctant and modestly interacted with voters. Later, the future president of France, Nicolas Sarkozy, took the same position.
Bank job
In 2000, Jerome Cerviel got a job at Societe Generale Investment Bank. Here he worked in the department of compliance (standardization). After 2 years, he was promoted to assistant junior trader, and after another 2 years, Cerviel became a sovereign and full-fledged financial trader. It is worth noting that he was taken to this position without a compulsory scientific education in mathematics. Jerome Cerviel received a good, but modest salary by the standards of the bank. He earned no more than 100 thousand euros per year, plus bonuses and bonuses.
Jerome Cerviel - the largest debtor in the world
In January 2008, Societe Generale Bank announced that as a result of capital fraud of one or more employees of the enterprise, the bank suffered heavy losses equal to slightly less than five billion euros. After a while it became known that this employee was Jerome Cerviel. The management of the bank and the entire administration, headed by Daniel Bouton (owner), officially stated that Jerome was to blame. The accusations went in the direction that Kerviel took advantage of unauthorized authorities, opening special bank accounts of 50 billion euros, and after his fraud swept over the tracks. The broker said that the leadership of the banks was well aware of the open positions of 50 billion euros.
The Story of Jerome Cerviel
The bank staff said that Jerome was a rather modest and reserved person and had mediocre professional experience and intelligence. Based on this, many argued that Cerviel could not independently crank out the financial scam in which he was accused by management. It is popularly believed that the company simply made a scapegoat out of its employee to keep silent about its own miscalculations.
In 2007, the father of a broker (Charles Louis) died, and some part of society believed that this was the reason for reckless thinking, which led to billions of financial losses. In addition, it was rumored that Jerome had divorced his wife or parted with a girl shortly before the incident.
At the end of January 2008, Jerome Cerviel was detained by the authorities. The preliminary charge indicated a breach of bank trust. He was released on bail, but after 10 days he was again arrested. March 18, 2008 Jerome was released into the wild.
Legal consequences of the dismissal of Cerviel
In January 2008, media reported that the bank calculated its employee, who was Jerome Cerviel. After some time, information surfaced that the dismissal was committed in a manner contrary to the law. Allegedly, the process of dismissal should occur in accordance with the formalities of legislative procedures: Jerome should have been invited to the office and personally convey information about the dismissal and its reasons. Based on these data, Jerome went to court on April 3 and demanded monetary compensation. At the end of the same month, information appeared in the media that a former broker and the largest debtor in the world got a job in an IT company.
In December 2008, the investigation removed all suspicions from the leaders of Societe Generale. Consequently, Cerviel could no longer count on the fact that responsibility can be shared with the leaders of the bank.
On January 26, 2009, the Investigative Committee released information that the case of Jerome Cerviel was completed. A hearing was scheduled for 2010: if the broker's guilt is recognized, then he faces three years in prison and a fine of 376, 000 euros.
Courts, hearings and outcome
On June 8, 2010, a hearing was held in the Cerviel case in Paris. The broker himself relied on the fact that all members of the administration and management of the bank knew about his financial fraud. Representatives of Societe Generale rejected this information. The final result was on October 5, 2010: the guilt of Jerome Kerviel was proved, and he was sentenced to 3 years in prison and two years probation. Also, the judicial verdict sentenced Jerome to reimburse the financial losses of an investment company in the amount of 4.9 billion euros.
In turn, a former employee of the bank tried to appeal his sentence in a court of second instance, but in October 2012 they agreed with the previously issued judicial verdict. If Jerome continued to earn about 100 thousand euros per year, then it would take him 49, 000 years to pay off the term. Cerviel's last hope was the French Court of Cassation.
