Jerome Kerviel - Scapegoat?

I believe Jérôme Kerviel was the scapegoat for Societe Generale. I question how unauthorized trading of this magnitude could go unnoticed. It seems highly unlikely that management was completely in the dark when such large profits were being made. Kerviel's unassuming background and position makes me very skeptic that he worked alone. Kerviel's earnings were very modest compared to the large sums he made for the bank. I also feel there was a lack of motive to commit these crimes. If Kerviel was guilty of breach of trust, forging documents and computer hacking then I still disagree with the punishment.

A study made by the U.S. Department of Justice of prison released in 1992, involving about 80 percent of the prison population, found that the average sentence for convicted rapists was 11.8 years, while the actual time served was 5.4 years. This follows the typical pattern for violent crimes in the US, where those convicted typically serve no more than half of their sentence. Jérôme Kerviel was sentenced to three years in jail and ordered to repay Societe Generale for its 4.9 billion-euro ($6.8 billion) trading loss. Kerviel's punishment is extreme compared to how we punish violent crimes in the US. I could not find any information on violent crime punishment in France. (WC 213)

https://angel.milligan.edu/section/default.asp?id=Spring%2DBUS%2DCIS%2DALL%2DCIS520%2D001

http://www.justice.gov/

http://www.bloomberg.com/news/2010-10-06/kerviel-says-he-is-crushed-by-6-8-billion-societe-generale-verdict-jail.html

The part I agree with you on in your post is the fact that crimes of violence are too often lightly punished. I worked in the Tennessee Department of Corrections both locally and on the state level in Nashville. It was my experience that our prisons are full of

Jerome Kerviel should be found guilty and punished. "Kerviel's job at SocGen was to engage in trading activities to arbitrage small price differences between equity index futures and forward contracts. Instead, he took bets on the market's direction and forged documents to make it appear he had hedged his positions." [1] Because of the years of experience in the compliance department Kerviel knew the bank did not verify data that individual traders entered in to the system. He also knew that if he was able to delete and then re-enter unauthorized transactions he would not get caught. All of the steps he took to cover his tracks make him knowledgeable of his crime. Unfortunately for Kerviel it also led to the discovery of his alleged fraud.

I do feel like Jerome Kerviel was a scapegoat for bigger problems at SocGen bank. It is just unfortunate that the time the losses occurred, the European stock market suffered heavy losses and began to fall more sharply in the following days. If Kerviel had acted as though he did not know what he was doing was wrong maybe there would not seem to be malicious intent. However, for two years he chose to cover his tracks too many times, he did not take vacation so other traders would not figure out what he was doing, and he argued that his superiors approved his transactions and did not care as long as the bank was generating a profit.

Based on Kerviel's actions, SocGen's reputation might be irreparable. However, one good thing might come out of this whole mess. Maybe regulators and/or banks have lost touch with the real world they are supposed to be financing and this scandal is what was needed to bring it back into line.

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[1] http://www.securitiestechnologymonitor.com/blogs/-25936-1.html

Reynolds, 2010, pg. 359-360

http://money.cnn.com/2008/02/01/news/international/socgen_whatilearned.fortune/index.htm

Without a doubt Jerome Kerviel should be convicted for his scandalous trading activity. Although Kerviel claims he was a scapegoat for the company, knowingly altering trading information at opportune times based on his knowledge of the company's nightly reconciliation procedures, indicates that he was fully aware that his actions were less than legal and ethical. His undoing was the attempt to alter information in a system that he was not familiar with. He was clearly taking extensive measures to cover his tracks. Considering his position in the compliance department, one would think Kerviel's mindset should be that of preserving his integrity and that of the company. Instead, he used the knowledge gained in the compliance department to his advantage and to the advantage of SocGen.

It is not uncommon for aggressive approaches to be taken in the high-risk world of trading, but when traders cross the line, they are typically dismissed in a quiet manner. In Kerviel's case, his charges consisted of breach of trust, computer abuse, and forgery. With $4.9 billion dollars lost as a result of his illegal actions (not that gaining that amount would make the situation different), why should he not be convicted and punished?

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http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3407991.ece

Of course, Kerviel should be found guilty of his crimes. He committed these unethical crimes of fraud, therefore he must be held responsible for his actions. He should have learned as a child that all inappropriate actions have great consequences. Just because Kerviel's company SocGen did not discover his discrepancy immediately, it does not mean that they are responsible for his dishonesty. He is a grown man, not a child that does not know any better.

SocGen's employeers trusted him and they dismissed the warning signs because they believed he was an ethical person. Unfortunately, he was not the man he was perceived to be and a computer system had to track his disloyalties. Pinning the blame on the company is a copout and he should never be hired to work in that industry again. I agree with the blog from the Securities Technology Monitor, "The message here is: Put in the best risk assessment and compliance system you can. But it'll never throw up all the warning signs you need, on screen. You still have to use your brain, to figure out what's going on. Whether you see something on a display or not." This article is the truth. In today's business world, you have to think with your brain, not with your heart.

(Securities Technology Monitor, 2010)

WC:219

I do believe Kerviel should have been found guilty and punished. He clearly used his position and knowledge