January 26, 2008 / 5:56 PM / 11 years ago

Jerome Kerviel: "genius" or mediocre backroom boy?

PARIS (Reuters) - Jerome Kerviel has been portrayed as both a “genius” and a mediocre back-office boy who sent a big French bank reeling by trying to play the world’s financial markets.

The 31-year old banker was brought into police custody in Paris on Saturday, suspected of causing a $7 billion loss through rogue trades at Societe Generale, France’s second-biggest listed bank.

When SocGen revealed the loss on January 24, the bank said it did not know of Kerviel’s whereabouts.

Since then, there has been a massive media hunt to spot the person blamed not only for the trading scandal but also for allegedly aggravating one of the most dramatic stock market sell-offs since the September 11, 2001 attacks.

Kerviel has been compared in the media to British rogue trader Nick Leeson, who brought down British bank Barings in 1995, but unlike Leeson, the Frenchman has not tried to flee.

Within hours of SocGen stunning markets with its announcement, a photo of Kerviel circulated among the financial dealing rooms of Paris. It soon became one of the most sought after images on the Internet.

Later a copy of what was purported to be his CV made the rounds in financial circles. The number of Kerviel’s friends listed on the Facebook networking site also gradually disappeared as entries were deleted.

The photo, taken from the SocGen internal website, shows a stern-looking young man, wearing an open-necked shirt.

Kerviel, who has family roots in Britanny, graduated with finance degrees from Nantes and Lyon universities.

He joined SocGen in 2000 where he moved from the back office to become an apprentice trader in the dealing room.

His knowledge of how the back office worked — where millions of trades are processed — enabled Kerviel to manipulate the computer systems to commit fraud and hide his tracks, SocGen say in official accusations.


A former teacher said Kerviel was a diligent student.

“He is a student with whom we had no problems, who was completely a totally normal student, very hard-working and with very good results,” Lyon University teacher Andre Tiran told France 2 television earlier this week.

Tiran said Kerviel’s education in back-office market operations could have been used to do wrong.

“It’s a little like someone who is a locksmith and becomes a burglar. If he has a very good locksmith’s training, it’s a little easier to become a burglar,” he said.

Family members and neighbors spoke warmly of Kerviel.

Colette Thomas, a 79-year old resident of the upmarket Paris suburb where Kerviel lived, told Reuters earlier this week the man was “very handsome” and well-mannered.

A family member, who declined to be identified said Kerviel was a “decent boy” who was being made a scapegoat.

So how could such an unassuming person get into so much trouble? French media reports this week said Kerviel had suffered a recent double blow in his personal life with the sudden death of his father, followed by a breakup with his wife.

He cut a slightly awkward figure among the whizzkid traders of SocGen, and might have been desperate to emulate their success, French newspaper Le Parisien reported.

SocGen said Kerviel earned just under 100,000 euros a year — a lucrative salary for many but not that impressive when compared with what high-flying investment bankers can earn.

A SocGen board member told reporters on Jan 24 that Kerviel was not “one of our stars” yet Bank of France Governor Christian Noyer described him as a “genius of fraud”.

After SocGen discovered Kerviel’s alleged activities and questioned him over the weekend of January 19-20, the bank decided to unwind his trading positions the following Monday.

But with world markets nervous over fears of credit losses and a possible U.S. recession, the bank may have exacerbated their losses by sending sliding markets into a steeper dive.

Others wondered if Kerviel could have really acted alone, as SocGen says. “It’s impossible he was acting by himself,” said Agilis Gestion, fund manager Arnaud Scarpaci, on Friday.

Reporting by Sudip Kar-Gupta; Editing by Andrew Hurst and Michael Winfrey

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