This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Rogue Trader Jerome Kerviel: Was the Punishment Too Harsh?

NEW YORK ( TheStreet) -- Jerome Kerviel, the rogue trader whose wild bets led French bank Societe Generale (SCGLY) to a multi-billion dollar loss in early 2008, has been sentenced to three years in prison.

The prison term is, ironically, where he gets off easy, as it will likely take several lifetimes to pay his fine -- a whopping $6.7 billion.

The figure is equal to the amount it cost Societe Generale to unwind his speculative trades, which the bank claims were unauthorized. Kerviel claimed throughout his trial that the bank knew of his activities and chose to turn a blind eye so long as his bets made money.

It would take Kerviel 304,000 years to pay his dues, the Wall Street Journal estimates, assuming he gets paid minimum wage once he is freed from prison.
Jerome Kerviel
A Paris court sentenced former Societe Generale trader Jerome Kerviel, 33, to three years in prison.

Some may say it is not an unjustified punishment for a trader who systematically took unauthorized bets that were too risky and covered up his actions by creating fictitious trades. Others may argue that that Societe Generale got off too lightly for its role in the mess.

Societe Generale has paid a $5.5 million fine to France's banking commission for not adequately supervising Kerviel. But that may seem too low a price to pay for the kind of loose risk management practices that have hurt investors and contributed to destabilizing the financial system in recent years.

Of course, Kerviel could always get out of prison and write a best-selling book or two about how he beat the system, not unlike another famous rogue trader, Nick Leeson, on whom the film Rogue Trader is based.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SCGLY $7.41 0.00%
AAPL $93.24 0.00%
FB $117.81 0.00%
GOOG $701.43 0.00%
TSLA $211.53 0.00%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs