KERVIEL STOP
PART TWO: ON THIS – COURT A – ON CRIMINAL ACTION I – On breach of trust
Considering that Jérôme KERVIEL is being prosecuted for:
“To have in Paris and in La Défense, during the years 2005, 2006, 2007 and until January 19 , 2008, in any case on the national territory and since time not prescribed, diverted to the detriment of Société Générale, funds, values or any good that had been given to him and that he had accepted on condition of returning them, representing them or making a specific use of them, in defiance of the prerogatives entrusted to him and beyond the authorized limit , set at 125 million euros for the DELTA ONE “desk”, using resources provided by the bank for the purposes of high-risk operations without any cover when they were to be employed exclusively within the framework of operations (market making) and risk hedging of derivative products, own account arbitrage on turbos warrants issued by competing institutions and taking “ab initio” directional positions framed in Intraday “.
Considering that it is common ground that Jérôme KERVTEL was assigned as a junior trader from January 2005 within the “Delta One” desk of GEDS, whose activity was arbitrage;
that he had thus been assigned by the bank a set of trading equipment (computer station, communication equipment, access to the Eliot computer system) giving him the power to conclude financial transactions on his behalf – placing orders by the ” intermediary of an automaton, either directly or in contact with interlocutors outside the desk little the intermediary of means of communication equipping his workstation – and to commit funds for the purpose of making a specific use of them on the market ;
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that it is just as constant, as has been developed above, that the activities which had been entrusted to it within the “DELTA ONE” desk originally consisted of a market-making mandate. ) and coverage of the risks of turbos warrants issued by Société Générale, extended from January 2007 to an arbitragist mandate on behalf of the bank on turbos warrants issued by competing financial institutions; activities which presented little risk to his employer insofar as they implied that any position taken was covered by a position in the opposite direction;
that if, of course, these two activities could lead it, through the deactivation of certain warrants, to find itself in an open position on the market, it had to ensure the hedging of its positions as soon as possible, and in any case in a delay which could not exceed a few hours, in the same day;
that this obligation had been reminded to him, in the “Cahier des procedures trading – DEAI”, in these terms: ” the interests of Société Générale must be defended, in part, our operations must be covered. The best course of action is to find oneself in a position to be able to justify one’s position a posteriori (to be in good faith) and to show an intention to be professional, which implies not trying to earn money by shifting the market. It is essential to prevent the compliance officer before a large-scale operation. In the case of specific products (barrier options, reverse convertible), it is necessary to validate with his line manager for the terms of coverage “ ;
that it is not contested by the latter, that it was committed under a written declaration of January 2006 to respect the rules contained in this document;
that therefore Jerome KERVTEL can not take refuge behind the fact that he had not read to extract from it, which in this case demonstrates his carelessness with respect to the instructions issued by his employer;
Considering that as the first judges correctly pointed out, the absence of a written mandate could not lead to presume the absence of delimitation in the field of intervention of Jérôme KERVIEL, the Banking Commission for having regretted it having however noted ” the expectations hierarchy and the financial objectives set for the trader were nevertheless explicitly stated in the end-of-year 2006 and 2007 evaluation sheets “;
Considering indeed, as it was explained above, that in its evaluations of 2005, 2006 and 2007, in which it participated, was recalled without ambiguity “management and development of the range of products listed Delta One in particular of the range of turbos – migration and reliability of turbos management processes, business development Germany, Finland UK …. competition turbos arbitration – specification and implementation of overall turbos management “; that nowhere was an ab intio directional trading activity mentioned;
Considering that it should also be emphasized that Jérôme KERVIEL, both in his conclusions and in his hearings, refers each time to his initial mandate as “market-maker” and “trader” on the turbos warrants of competition to justify -the knowledge by his hierarchy of his fraudulent positions due to his result of 55 million euros, and bridging differences that related to thousands of contracts each time that were unrelated to the said mandate to reason for their importance -;
that it is evident from this that the latter had no doubts as to the delimitation of his activities which had been assigned to him by his employer and cannot therefore argue
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the vagueness of the mandate entrusted to him, the latter constantly referring to it.
Considering that it is common ground that his mandate excluded any “ab initio” directional position taking with the exception of directional positions linked to the hedging or deactivation of the turbos warrants of Société Générale or the competition for a period of time very short, a few hours at most in the same day.
Considering also that Jérôme KERVIEL was bound, like any trader, to respect the market risk limits set by the GEDS management and the “Market risk” department, which in this case for the “Delta One” desk were collectively set at 75 million euros then to 125 million euros, as of January 2007; it is undeniable that this limit that applies collectively to all of the desk, a fortiori, is required each trader individually;
that moreover “the book of trading procedures -DEAJ” – drew the trader’s attention to the importance of taking into account the market risk in these terms “the main risk that the trader manages is the market risk. Each trader must be aware of the market risk limits granted to him by his risk manager and be able to present a document showing the risk limits of the activity to which he belongs “.
Considering that it is established that this limit of 125 million applied imperatively to traders for “extraday” positions and, that daily, any exceeding of this limit was notified to the “risk manager” and to the traders composing the desk for the purposes of hedge or cancel positions that exposed the bank to the reported risk;
that it is indisputable that Jérôme KERVIEL knew this limit to have received the said mails and to have responded to them as it was developed above;
that the latter also recognized throughout the investigation the existence of this limit for having declared: “// should not exceed the global limit of 125 million euros for the desk” (D 77) and to have, to the question of the investigator “^ what does hide the actual positions do you allow to keep your positions as long as possible ,” replied, “to respect the pseudo-limit of 125 million. If I n hadn’t masked, I would probably have had my positon cut off “;
that in front of the first judges he indicated: “we received an email every morning … the whole team, the whole hierarchy including me were aware of the emails”.
Considering, moreover, as it was developed infra the whole of its hierarchy, maintained that the “Delta One” team could not carry a directional risk at the end of the day greater than 125 million euros; that similarly this limit was accepted by the traders, of this desk, such as Mr. Bou Ly WU “: a global limit of 125 million euros is granted for the whole of the desk .. for this purpose at each observed overrun we receive a desk-wide risk email ” and by trader assistant Thomas MOUGARD: “ of 125 million euros is exceeded.
Considering that before the first judges Jérôme KERVIEL conceded that he was not part of his mission to take speculative positions over several days, however adding “I did it because I was making money in full view of everything the world (p. 45 courtroom note) and admitted that he had “gone too far in his mandate”, although he considered it vague.
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Considering that it is common ground that with regard to open positions, at the end of the day the collective limit of 125 million euros was imposed on Jérôme KERVIEL, as on all the other traders, who had to immediately cover their position or the give up even though they were acting within their mandate;
Considering that it was admitted by the hierarchy of Jérôme KERVIEL, in particular by Messrs ROUYERE and CORDELLE, that although it did not come within the attributions of this one to take directional positions “ab initio”, there was a tolerance with regard to positions taken and unwound during the day which made the bank run a limited risk; that Eric CORDELLE thus admitted having seen the defendant take on the automaton of Bou Ly VU, for the training of the latter, “intraday” positions which lasted a few hours and generated a result of several hundreds of thousands of euros, this was confirmed by Mr. VU, who declared that he had observed that Jérôme KERVIEL in the presence of Mr. CORDELLE had taken positions on his machine that were unwound during the day in “intraday” relating to 200 or 300 contracts; Mr. RAKOTOMALALA indicating as for him to have seen it “spielé in intraday” with the knowledge of the management with a maximum of the order of 30 to 50 million euros.
Considering that in this context, Alain DECLERCK (N + l of the defendant during 2005/2006) had underlined: “Jérôme had the right to take limited directional positions
to 1 million euros over the day … one month later (Allianz affair) its limits were
increased to 5 million euros .. 1 million is a junior limit, the standard limit is 5 million “ ; limits known to Jérôme KERVIEL who acknowledged ” my limit has been increased from 1 to 5 million euros by memory ” ;
Considering that it appeared that this limit had followed the evolution of the activity volumes of the desk which had progressed in 2007, but had to remain marginal and limited.
Considering that as such will be recalled the statements of the accused who specified that if he did not hide from his hierarchy to take “intraday” positions for 400 or 500 futures (30 to 50 million approximately), regarding the twenty positions for a maximum of 6,000 or 7,000 futures (600 million minimum) he had not told anyone;
that it can be deduced from this that if there was a tolerance of the hierarchy of Jérôme KERVIEL, namely of his N + l, with regard to the taking of directional positions in “intraday”, this was limited to 300 to 500 contracts;
that as such will be recalled the testimony of Jean-Pierre MUSTIER (N + 7) before the first judges: “the limits applied equally to intraday and extraday positions, for Delta One was 125 million, if it there was a tolerance it’s a mistake. Traders do n’t play they work “
Considering that Jérôme KERVIEL cannot use this tolerance as an argument to justify taking directional positions “ab initio”, outside his mandate, and the limit of 125 million “extraday” over several days, several weeks, or even several months , for amounts of several billion, which made his employer run a considerable risk , qualified as “lethal” by the president of Société Générale, Mr. BOUTON, positions which he had moreover concealed by fictitious transactions ;
Considering that, as the first judges correctly pointed out, the failure of Société Générale in setting nominal limits, considered by the Banking Commission as a breach of its obligations arising from article 14 of regulation n ° 97.02 , cannot exonerate the accused from his duty of transparency with regard to his
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employer; that the bank’s lack of vigilance in monitoring only existing limits , functioning as warning indicators, in no way exempted Jérôme KERVIEL from the duty to inform his superiors of the reality of his overruns or to come back within the limits set for the desk ;
that it is advisable to recall the terms of the “notebooks of the trading procedures”: “In the event of loss or of gain for an operational risk higher than 50 000 euros, the trader will have to fill the standard form within two days which follow. The document must be validated by the direct line manager (). It is essential to notify the compliance officer before a major operation “.
Considering that Jérôme KERVDEL cannot seriously claim that the attitude of his hierarchy in 2005, who had inflicted an oral warning upon him when he discovered his directional position on the Allianz title to the tune of 15 million euros, would have prompted him to overcome its limits;
that indeed it should be noted that the result linked to this operation (500 000 euros) had been excluded from the calculation of its bonus; Messrs DECLERCK BONIN and also I ‘ warning oral, had advised that if he began this kind of thing he “could get fired from the bank”; that above all it should be noted that Jérôme KERVIEL had hidden from them having masked his Allianz positions by a fictitious cover, which made Mister BONIN say that if he had been informed he would have dismissed him unceremoniously.
Considering that it is established by the procedure, as it was developed above, that Jérôme KERVIEL deliberately took directional positions “ab intio “, outside his mandate, which remained beyond the day, see on several weeks or months; whereas these first actions relating to shares were revealed in 2005 and continued during 2006; that it persisted in this path during 2007 and 2008, building a directional position on shares of 2.5 billion in January / February 2007, and on three occasions directional positions in futureson European stock indexes (mainly Dax, Eurostoxx 50 and Footsee) for total amounts of 30 billion euros twice in 2007 (June / July and November) and 50 billion euros in the first 18 days of January 2008 ;
that these facts, updated by the internal control services and the bank’s inspection, then confirmed by the inspection mission of the Banking Commission, were finally recognized by Jérôme KERVIEL, during his police custody, information, at the helm of the Tribunal and the Court;
that in court he conceded that he did not enter into his mission to take speculative positions, which could last several days, adding “I had it because I was making money, in full view of everyone. world “, admitting ” that he had gone too far in his mandate “; that in his conclusions before the court he recognizes the excessive nature of the positions taken in nominal terms, “losing all sense of reality”.
Considering that the defense of Jérôme KERVIEL also maintains that not only the whole of his hierarchy and the control services knew but had let him do it due in particular to their inertia in the face of the various indicators of internal or external alerts , thus developing:
* 1 – that all of its positions and their nominal values were visible “in three clicks” in the Eliot database and that they had been seen and known by everyone and in particular by Mr. CORDELLE:
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Whereas if, of course, the hierarchy of Jerome KERVIEL, in this case Eric CORDELLE had access to the database ELIOT, will be recalled that the supervision of traders operating on the basis of “reporting” and automatically generated overviews from of this database, which focused on risk exposure and income, two indicators perfectly masked by the fictitious transactions entered on purpose by Jérôme KERVIEL, who moreover declared during the investigation “I was hiding the exposure, the Company Générale therefore did not know my positions (D62) “It is correct that I have understood, I would say hundreds, multiple fictitious deals in the Eliot system to hide my positions and my results. “
Considering that the title Thomas Mougard, working daily to Jerome KERVIEL, has always claimed to have known nothing of its non-directional positions covered “Engage billion euro this does not seem conceivable to me”;
that Sébastien GERS, trader, at the Delta One desk declared “I don’t know if it is the manager’s role to dissect the operations of each trader over a day, and if he did so it would take him a long time to see such operation “;
that Mr. Bou Ly VU, also a trader , declared ” in our” report “what we see is the net position. Therefore if the positions of Jérôme KERVIEL are completely covered, nothing can be detected except to analyze in detail each operation, although even looking in detail on the hedging operations, the fictitiousness of these cannot be seen at a glance “;
Considering that in front of the first judges Eric CORDELLE recognized that if he had indeed access to the ELIOT system he did not use it, in particular to verify the transactions “because he did not know how to use it, having had a training of two hours on the Eliot system .. ,, admitting “I was a little lost in the computer science and vocabulary, I mastered the concepts, but I did not know the computer tool … the most important when I arrived was to train me on Delta One, senior traders were familiar with this tool “ (audience notes page 257);
that before the court he clarified: “in 2007 I was in training, it was a learning phase. In 2008 I had to be fully responsible for the desk. I accepted it because there were traders on who I could count “;
That in this capacity Martial ROUYERE, before the first judges admitted “Eric CORDELLE lacked the experience of trading. … Jérôme KER VIEL did not support his manager. He shot him in the foot” ( hearing notes page 281).
Considering, therefore, as soon as the reports did not reveal any anomaly in terms of exposure to risk and results, the manager who validated them daily was therefore not particularly inclined to dissect all the operations carried out by Jérôme KERVIEL in the Eliot system; that Thomas MOUGARD thus indicated “in practice what we are looking at is the net position and if it generates a query from us the details of the operations will be studied, there is no systematic daily statement of the operations carried out by the trader outside of detected anomalies “.
Considering that Claire DUMAS before the first judges explained ” on the ability of managers to identify fraudulent operations, we still had to look for them” … on a daily basis, it is difficult to look at deal by deal. In Jérôme KERVIEL’s book, there were indeed 500,000 transactions “; that these statements were confirmed in court by Carlo GONCALVES, deputy head of information services at Société Générale, who specified that on the perimeter of the accused had been enumerated over the year 2007: 100,000 transactions on futures, or 800 per day, however admitting “/ ‘all transactions are in Eliot.
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/ ‘we search, we can make requests. Otherwise it is impossible in three clicks, if you do not know what you are looking for …. you can find everything, if you know what you are looking for “;
Considering that if, of course, Eric CORDELLE and the traders of the deskDELTA ONE saw Jérôme KERVIEL place transactions on his automaton or on that of Bou Ly VU, all indicated that for them these were intraday deals, and that they didn’t know anything about his “extraday” directional positions :
– Bou Ly VU: I saw him use my automaton two or three times … when he came he took positions that he unwound during the day … he bought or sold a certain quantity and a few hours more tard took a position in the opposite direction. My transactions entered by Jérôme KER VIEL were transactions on DAX futures for positions of 200 or 300 contracts each time …. Eric CORDELLE was a witness once “.
– Taoufik ZIZI “I think the hierarchy knew that he was doing directional ^.) For me, directional is intraday. … to my knowledge nobody was aware of his actions”.
* 2 – that these operations qualified as fraudulent, had apparent consequences in the context of the monitoring of its cash flow (margin calls, deposits, result):
Considering that if, of course, as it has been developed, Jérôme KERVIEL’s treasury presented abnormal surplus or deficit balances, which could be unrelated to his mandate, it will be recalled that Mr. DÉPAUW, who was responsible for the management of the cash and monitoring of its limitations, had certainly identified, in July 2007, two peaks of cash on the operational center Jerome KERVIEL of the order of 6 to 8000000000, which had been regularized within three days by the latter by state of an entry error, he had however noted that Jérôme KERVIEL’s cash balance was similar to that of other Delta One operating centers, including the range was between minus 2 billion and plus 2 billion and much lower than other “GEDS” centers;
that from then on the balance of 1.4 billion had gone unnoticed, as Magalie CHARON, in charge of reconciling the yro / 2 / office treasury and back office accounting treasury, underlined : “this balance of 1.4 billion of December 2007 did not bring any comment from the middle office, because you have to see the financial package in its entirety (products plus hedging) so that the figures are meaningful, which I did not have “ ;
that it should in fact be recalled that the cash flow of a trader aggregated very numerous and multiple types of flows which sometimes offset each other, and reflected the outstanding liquidity arising from the trader’s activity, so that the sight of a cash balance, it was not possible to know the nature of the flows which composed it, in particular to deduce the importance of the volumes treated and even less the realized result corresponding to the amount of the gains or losses generated by the positions taken on the market; as such the “Green Commission”, which like the Banking Commission deplored that Eric CORDELLE, who had every morning the cash balance of each operating group could not identify the fraudulent activity of Jérôme KERVIEL, noted however ‘7 / is true that the cash flow of the front office is not an easy indicator to interpret and the information available required a good knowledge of its mechanisms for detecting fraud “.
Considering that Eric CORDELLE who conceded, “not to check daily” the
reporting
of cash “SAFE” explained to have noted the surplus of cash of 1.4 billion
around January 10/15, 2008 and asked Jérôme KERVIEL to lend this
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sum, but without asking him the origin, not being able to suspect that it was about “PNL”; that the defendant confirmed to the investigator Eric said ‘ c’ ‘is you’ re not short, without asking questions about the origin of the cash and I assumed that he knew that it was PNL realized … “.
Considering that this conversation which took place in the month of January 2008, a time when Jérôme KERVIEL was aware that the bank was investigating his “Baader” operations , it seems unlikely that the latter did not openly speak of the origin and of the nature of this sum with his superior who questioned him and, who according to him, was perfectly informed that it was about his result; gain which he will not admit the existence until January 18 when his hierarchy will have discovered the fictitious nature of the “Baader” deals .
Considering that in respect of security deposits, it will be recalled that the N + 1 and N + 2 of Jérôme KERVIEL, who alone could have noticed abnormally high amounts of sums paid for his activity, were not recipients of the detailed statement of the cost of this guarantee per trader account; that in addition, if the checks carried out by the back office and middle office services covered all of the deposits paid by the “GEDS” entity, it was not their mission to analyze their cumulative amounts per account. trader; finally, the back office, which was not intended to carry out a consistency check on the amounts paid, in addition to the deposit payment, margin calls, commissions and interest.
Considering that likewise, in respect of margin calls paid to FIMAT, it will again be underlined that they were processed globally for all market activities, the back office dedicated to margin calls being responsible for paying them globally; that thus the positions taken by Jérôme KERVIEL were thus diluted in the mass of the calls of margin resulting from the whole of the activity of trading of the bank; that in addition it did not belong to the dedicated back office to proceed to the analysis of its evolution or the detailed amount paid for each of the operating centers;
* 3 – that his declared result of 55 million was not consistent with his initial mandate and with regard to the imposed limits of 125 million euros, which could not escape his hierarchy:
Considering that if, of course, the “Green Mission”, after an in-depth analysis of the result of 55 million euros (in reality 42 million) declared by Jérôme KERVIEL to his hierarchy during his appraisal interview at the end of November 2007, has identified that part of this result could only come from his fraudulent directional positions, without being able to fix the exact amount, the latter assured him that it came from his activity within the limits of his mandate namely 25 million euros at for arbitration of competition turbos and 17.6 million for market-making; (12 million euros corresponding to the commercial margin on the market-making activity )
that Eric CORDELLE, who had been asked by Martial ROUYERE to analyze the amount of 25 million euros which had seemed important to him, and who in return had made no comment, explained: ” Jérôme KERVIEL was playing on products with deactivating barrier which are particularly profitable in the event of opening of the market in gap and of strong volatility “ adding ” it often happens that a member of a team releases 50% of the result. I observed this in a previous experience This result is linked to the growth of the activity, the business ofarbitrage of the turbos of the competition which generated the result and also to the intraday arbitrations carried out by Jérôme “.
Considering that it therefore appears that due to the fallacious presentation of his result, his hierarchical superiors, who considered Jérôme KERVIEL as a
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serious and talented trader in his duties, and who had observed an exponential increase in his activity, thus validated his results without questioning further.
Considering that Eric CORDELLE during a confrontation with Jérôme KERVIEL (D696-8) then again before the court declared: I lost my job, I’m tired of having a liar in front of me. I want to ask him the following question: do you remember during a drink organized on the desk you asked me how much valo was needed to get a bonus of 500,000 euros. As I was not answering directly you asked me for 50 million valos, it was something good, I answered you, it does not seem stupid to me . I say this because I am sick of you saying that you are a victim, a fuse “; what Jérôme KERVIEL claimed before the investigating magistrate no longer remember, then that it was wrong.
Considering that it will be recalled again that Jérôme KERVIEL was careful not to declare all of his result of 1.4 billion that he had concealed by various artifices, which seems inconsistent if his hierarchy as he maintains had a perfect one. knowledge ;
that above all it should be emphasized, that during his evaluation interview Jérôme KERVIEL had requested a bonus of 600,000 euros which should only be granted to him up to 300,000 euros, which again tends to demonstrate that his hierarchy was unaware of his gain 1.4 billion, excluding to be well ungrateful to a trader having realized a gain equal to that of all desk GEDS;
that in this capacity Mr. MENOUCHI, working relationship of the defendant declared: “the only time he told me of his dissatisfaction (Jérôme), it was at the end of his assessment interview at the end of November , early December 2007. He was not happy with his estimated bonus “
* 4 – that the two EUREX letters could only draw the attention of his superiors to the importance of his positions unrelated to his mandate:
Considering that if, of course, a complete reading of the two letters of the company EUREX, including more particularly that of November 26 which reported for the day of October 19 of the purchase of 6,000 future DAX contracts in two hours, should have attracted attention of his hierarchy, in this case Eric CORDELLE, on the importance of the transaction with regard to his mandate, it should be noted:
– on the one hand, that these two requests, which mainly concerned the understanding of the trader’s modus operandi and the strategy underlying his transactions carried out through FLMAT, did not constitute an alert in the proper sense, and in addition were not formulated in alarmist terms, the first showing significant positions in the opposite direction (long Eurostoxx and short DAX), therefore covered and carrying minimal risks and the second focusing more particularly on the non- understanding of the terms used in the response ;
– on the other hand that the ethics department, recipient of these two letters, addressed itself directly to Jérôme KERVIEL, who had provided him with very technical answers intended to cloud his practices, and not hesitating to link his operations to its strategy of hedging Societe Generale warrants or the competition, a statement which could only reassure and, above all, to produce in support of its explanations to give them force a summary statement setting out the details of the so-called positions covered by the DAX contracts negotiated on October 19, which turned out to be a fake, Jérôme KERVIEL having moreover admitted having invented the data and in particular the quantity of warrants.
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Considering that Eric CORDELLE, who had been made aware of the existence of the first letter, without knowing its content but had participated in its response, and who always affirmed, under oath, both during the investigation, and before the first judges and still before the court, not to have read the second letter, nor its answer nor to have participated in its drafting, maintained that at no time Jérôme KERVIEL did not mention before him the number of contracts of future cities in the two letters from Eurex, which was confirmed by the defendant indicating that he had not spoken to him about the number of contracts, nor of his open positions “no he never asked me about this”\
that he thus seems completely inconceivable, whereas Jérôme KERVIEL claims that Eric CORDELLE was perfectly aware of his directional positions, that he did not spontaneously inform him of his real positions, or that his superior did not mention them on this occasion.
Considering, on the other hand, that if his hierarchy had not understood the meaning, the scope and the danger of the questions asked by EUREX, Jérôme KERVIEL had understood it well, as evidenced by the messages exchanged with Moussa BAKIR:
November 19: “I’m in trouble”
November 28 “I do not want them to release my pose at 250,000 (contracts) December 7 ” not yet finished the response from Eurex, and it stresses me on December 13 “to the suggestion to take a vacation he replied to his friend ” yes in jail”.,
* 5 – that the bridging differences identified during the March and April 2007 account closings for 94 million and 142.8 million euros as well as the differences in method of several million euros identified on several occasions (August, November ) and of which his hierarchical superiors had been informed, could not deceive anyone because of the implausibility of the information given, the importance of the corrections to be made and the sizes of the products in question ” 3 times 20 million warrants to buy back”:
Considering that if, of course, the explanations provided by Jérôme KERVIEL, appeared a posteriori as inconsistent, and should have alerted the control bodies and especially his hierarchy “, it will be recalled that during the bridges (March, April,) the real issue by Jérôme KERVIEL was to obtain from PNL / REC the transition to accounting of the results of its fictitious operations (in particular fictitious deals in the face of a “pending” technical counterparty that does not go into accounting “); that to do this he invented a modeling problem linked to the deactivation of warrants at the end of the month, an explanation which seemed plausible to the control service, Mrs AUCLAIR, in charge of the production of the monthly gateway document having declared: “the explanations held up well, external elements attesting to the explanations, there was no reason to doubt … if I validated these deviations it is because the explanations given seemed probable to me … it would have been impossible for me to sign writings that I did not understand “… I told myself that he was really not paying attention and that he was negligent on the booking of its operations, but at no time did I imagine that there was anything behind it “;
that in this respect it should be noted that Jérôme KERVIEL had known how to instill a climate of confidence with the staff in charge of controls at the middle office, going so far as to promise a bottle of Champagne to Madame AUCLAIR: “which is surprising at the At the time, Jérôme KERVIEL told me that he was worried about his deviations, 11 told me that he was going to jump if it was not resolved, if we succeeded he told me that he would offer me the Champagne “(note hearing high court page 234);
that Madame CHARON, in charge of the middle office , for her part, attested ” he was very available and always took the time to answer questions, while most
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of traders contented themselves with transmitting requests to their assistant traders … in general he was very attentive to the problems encountered with the NLP teams he was available and attentive, always accommodating, seeking to find solutions, so as to do not “complicate the monthly arrests”.
Considering that it thus appears, as the Banking Commission pointed out, that the various control bodies whose mission was to identify the discrepancies and correct them, and which systematically sought error before seeking fault, and which did not he did not have the culture of fraud, because of the climate of trust that had been established with the trader, contented themselves with his explanations without going into them further.
Considering that the hierarchical superiors of Jérôme KERVIEL who admitted that a posteriori, the details of the calculations were aberrant, explained that they had only reacted on the technical part which posed a problem, namely the deactivation of warrants at the end of the months, problem which had to be solved in the very short time of the closing of accounts;
that as such it should be noted, like the first judges, that the emails referred to by the defense one of April 16, 2007 sent by Marine AUCLAIR to Philippe BABOULIN and Martial ROUYERE (who was in New York) bearing in subject: ” Important differences on the future etfwd 2Â and the other of 16 May addressed by Sébastien Philippe CONQUET BABOULIN and Martial ROUYERE, sent a copy to Eric CORDELLE (in office since 1 st April) and with object “warrants knockés 2A -ARM 0407 “ , emphasized, for the first message, the explanations provided by Jérôme KERVIEL during the accounting controls and on the expectation of the latter for information which it will be established later that they were false, and for the second “under the EDM heading “, on the deviation of method rather than on the volumes concerned; that in this logic, the discrepancies were not in themselves suggestive of anomalies, their mention appearing rather intended to provide the elements which should enable the accounting treatment and valuation of an operation to be achieved .
Considering thus, that the accounts closing of March and April 2007 gave rise to an important exchange of mails between the various control services and the hierarchy of Jérôme KERVIEL for the purposes of explaining and correcting the discrepancies observed, which turned out to be useless, if we stick to the thesis of the accused, according to which a plot had been hatched against him involving not only his entire hierarchy at the highest level, but also all the control services;
Considering above all that it should be remembered, as has been developed at length above, that Jérôme KERVIEL, in order to give force to his false explanations and to validate them, both with the control services and with his hierarchy, did not hesitated throughout 2007 and again in January 2008 to provide them with false documents and went so far as to modify the characteristics of the products entered in the Eliot / Front office database so that they coincide with its explanations;
that in this capacity Mr. PEUCH-LESTRADE, in charge of the statutory audit, declared “a false entry followed by a false document or a false explanation can only break the internal control system”.
Considering that will finally be underlined, that Jérôme KERVIEL, who was not satisfied at the discretion of the controls to provide false answers supported by equally false documents , had put in place, with his experience in the middle office and as an assistant trader , a fraudulent system, by resorting to “pending” or internal technical counterparties such as “Click Options, to purchases of securities at lagged value, by the change of counterparties or products (forwards instead of futures, ); battery of techniques that he used successively in view of the questions put to him by the control services; that thus the canceled fictitious operations were substituted
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new operations just as fictitious (see June and November operations) in order to pass the various controls.
Considering that the court notes that Jérôme KERVTEL throughout the procedure evolved in his means of defense;
that thus at the outset he recognized that the bank knew nothing of its positions, then to imply that it could not be unaware, implicating Messrs CORDELLE, ROUYERE and BABOULIN then, then, that they knew and have let it be done, to finally for the first time assert before the court, that the entire hierarchy of the bank at the most at the level and the control services knew and that ultimately, in 2006 he had been the victim of a plot which had for aim to conceal the losses caused by the so-called “subprime” crisis and to make it bear them.
Considering that in his version, “they could not ignore and they knew”, Jérôme KERVTEL had thus maintained that his hierarchy had let him do it because he was earning money;
that when confronted with the fact that he had started by losing a lot of money between March and June 2007, namely 2.5 billion, he affirmed that his hierarchy had an interest in not saying anything because “she would have lost her job like me ” ” and his salary, if my commitments were detected (D 55)”;
Considering that this assertion is totally inconceivable, the bank cannot let one of its employees commit it to the tune of 30 billion, representing all of its own funds, and generating a loss of 2.5 billion euros, i.e. twice the result of GEDS, that is to say the work of 1,400 people (declaration Christophe MIANNE D 557); that it is just as inconceivable that he let him take in January 2008 a directional position of 50 billion euros which committed one and a half times the bank’s own funds and “exploded its cook ratio”;
Considering that will be underlined, that the fraud of Jérôme KERVIEL was discovered following various controls relating to his “Baader” operations, the purpose of which was to conceal his gain of 1.4 billion, therefore while he had won a lot silver.
Considering in this regard, that Eric CORDELLE declared “I arrive in April, if I had knowledge of latent losses of the order of 88 million at that time, I do not see my interest in taking this post. The reasoning of Jerome is absurd. The losses have increased to minus two billion. It is absurd to say that if I had known I would have had the slightest interest in not speaking. “(D 696-7).
Considering that with regard to his thesis of the “machination”, the defense of Jérôme KERVIEL argues, that the bank anticipating its losses on the “subprimes” would have had, since the beginning (2006), knowledge of its positions taken massive out of mandate and would have let it happen, finding an interest in it, going so far as to state that its positions were covered by another “desk”, thus not running any risk to the bank, and this in order to make it endorse in 2008 losses linked to “subprimes”;
Considering that the court notes that this theory is conceivable only in the case where the positions of Jérôme KERVIEL were losing, which was random; that thus this plot would have “aborted”, if as for the previous times, the market had reversed and its positions had become winners or its losses equal to zero, following their unwinding.
Considering that to support this theory, the defense relied mainly on the testimony and the note established by Mr. HOUBE, employee at FIMAT, who
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based on an examination of the accounts of Société Générale at FIMAT between January 21 and 25, 2008 (unwinding) to deduce an assumption according to which: a desk intervened symmetrically with the positions of Jérôme KERVIEL during the week of January 21, 2008 which could be linked to subprime transactions;
Considering that Société Générale in a note in response, with supporting documents, demonstrated that the “very important symmetrical” positions to those of Jérôme KERVIEL corresponded to the operations of unwinding the latter’s position, provided by Mr. KAHN under his account number with FIMAT “SF 615”, and that it was therefore perfectly logical that the FLMAT SF 615 account of Mr. KHAN should have on the days of January 21 and 25 built a position symmetrical to that of the account SF 581 attributed to Jérôme KERVIEL.
As such, Mr. HOUBE admitted before the Court that he was unaware that the SF 615 account was that of Mr. KAHN, adding (e you made things complicated when they could have been simple “;
That Mrs. DUMAS, representing Société Générale, explained at the hearing that Mr. HOUBE, on the side of FIMAT, which was the compensator, only saw a movement of the accounts, that the latter therefore lacked part of the process operated by Société Générale, namely transactions transferred by forwards that did not go through the clearing house;
that Mr. HOUBE admitted that he saw in these operations only one leg of the arbitration;
that regarding the theory on “subprime” he said “// is clear and that was what was being said. But I am not a market analyst. It is only an opinion”.
Considering that it is improbable that according to the theory of defense, Société Générale gradually visualized the positions of Jérôme KERVIEL, without having control, in order to cover them.
Considering in conclusion that it results from the whole of the procedure that at no time the hierarchy of Jérôme KERVIEL was informed or did not have knowledge, of his directional positions “ab initio” outside mandate of current 2005 to January 2008, nor its losses of 2.5 billion in June 2007, nor its gain of 1.4 billion in November 2007; that Jérôme KERVIEL has, on the contrary, with obstinacy and persistence always made sure to hide them as follows from all of his statements:
‘7 / is correct that I entered I will say hundreds of multiple fictitious deals in the system in order to hide my positions “
“It is a very sudden result (gain of 28 million February 2007) which arrived at the end of February, I did not want to reveal the fact that I had taken such important positions “
“In March as in April the positions taken had generated losses, my concern was not to show them, neither the exposures linked to these positions, nor the losses ….;
“If I hadn’t masked my position, I would have been cut off … a manager might have thought this position was extravagant”;
“So I had to find another solution to hide the 1.4 billion and I therefore decided to enter the forwards against Baader (D186 / 4)
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“Yes these explanations had nothing to do with the reality of the operations. These purchases and sales of securities were fictitious and showed a loss of 1.4 billion euros intended to hide the real gain of 1.4 billion euros (D353);
“I have not spoken to anyone, whether it is Messrs CORDELLE, ROUYERE or BABOULIN (January strategy anticipating an upward market reversal);
Considering, moreover, that he was perfectly aware of the seriousness of his acts as evidenced by the “chat” with Moussa BAKIR “:
January 17 ‘. Bon chui foutu
January 18 in the morning: eg my last hour here
Considering that finally, it should be remembered that again on January 18, 2008, Jérôme KERVIEL, in order to hide his result of 1.4 billion in December 2007, will provide false explanations to Mr. PAOLANTONACCI, going so far as to manufacture at the support of his lies, two false pre-confirmation emails from “Baader” and “Deutsche Bank” and that between January 2 and January 18 he will mask by fictitious operations his directional position of 50 billion;
Considering therefore that all the elements unsuccessfully invoked by the defense do not allow us to deduce that Société Générale was aware of the fraudulent activities of Jérôme KERVIEL, or even that it could have suspected them, the statements of the participants in the cell crisis set up on January 18, 19 and 20 demonstrating their amazement as the positions taken by Jérôme KERVIEL were discovered:
Mr MORLAT: “it is a real shock, a tsunami, that is inconceivable”;
Mr. FRANÇOIS: “I am deeply shocked. A shock in several stages: the first when on Saturday Jérôme KERVIEL tells us that his email is false, that the 1.4 billion is on the accounts. First shock because I could not imagine that. Second shock when we see the history of his positions in 2007. Third shock when he says he lost everything in 2008
fourth shock when I learn of Mrs. DUMAS’s SMS (50 billion in loss positions of 2.5 billion). It looks like an earthquake and I quickly imagine the consequences, namely the obligation to unbuckle this position as soon as possible “
Considering consequently that Jérôme KERVIEL, by passing, knowingly and without the knowledge of his employer on the markets of the orders of an exorbitant amount, deprived of all cover making run for his employer considerable risks, which did not enter his mandate, ie market-making, risk hedging derivatives and arbitrage-turbo warrants issued by competition or in the authorized limit of € 125 million for the positions he extraday ” or the limit framed for directional positions “ab initio” in intraday “, diverted technical means made available to it by using them for purposes other than those assigned to it;
that therefore the offense of breach of trust is established against Jérôme KERVIEL, it does not matter whether Jérôme KERVIEL has appropriated the thing entrusted to himself, or that he has drawn personal profit from it; that however, it will be recalled that he had requested a bonus of 600,000 euros during his interview in November 2007, based on his result of 55 million, part of which will later prove to be the result of his fraudulent operations;
That consequently the referred judgment will be confirmed on this head of prevention.
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77 – On the fraudulent entry of data into an automated processing system
Considering that Jérôme KERVIEL is accused of having fraudulently introduced data into an automated system by:
* entering and then canceling fictitious transactions intended to conceal both market risks and the latent results of unauthorized directional positions,
* entering a pair of fictitious purchase / sale transactions for identical quantities on the same product but at a different price in order to generate a fictitious result offsetting the actual result and thus bringing the net position to zero,
* the seizure of provisions during the month thus making it possible to cancel and therefore conceal over this period, a previously generated result.
Considering that the material element of the offense defined by article 323-3 of the penal code is based on the introduction, modification or deletion of data in an automated processing system; that the introduction supposes the incorporation of new data-processing characters on a support of the system and the removal a physical attack on the integrity of the data;
On the unconventionality of article 323-3 of the penal code:
Considering that in this respect the defense raises the absence of a definition in article 323-3 of the penal code of the concept of “automated data processing system”, essential for the application and understanding of the criminalization criminal law; that once this article is contrary to the principle of legality of offenses and penalties enshrined in Article 7 paragraph 1 st of the European Convention on Human Rights.
Considering that the court notes that this means had not been raised before the first judges.
Considering that the notion of “automated processing system” was defined during parliamentary work by the Senate rapporteur in the following terms: “any set made up of one or more processing units, memory, software, data , organ, input and output, and connection which contribute to a determined result, and together being protected by safety devices “.
Considering that the doctrine specifies that the very notion of system supposes that these elements are united in order to produce a determined result: the automated processing of data;
that in addition, the notion of data must be considered in its broadest sense as “the representation of information, the form and not the substance of any element of knowledge;
that it follows from this that the terms which define the concept of ” automated data processing system” are immediately intelligible and moreover have not given rise to any difficulty of interpretation by the courts, the only question relating to case law on the nature of the intentional element.
Considering consequently that this plea must be rejected;
* On the lack of precision relating to the automated data processing system in question:
Considering that the defense also raises that the order for the referral of the examining magistrate does not specifically mention the automated data processing system in question, in the prevention;
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Considering that if, of course, the prevention does not mention the ELIOT system , the order for referral of the examining magistrate who seizes the court as a whole and whose notification was made to the defendant, refers many times to seizures in the ELIOT system, in particular on page 25 under the title ‘7th mask of fictitious operations “: To conceal his positions and results, Mr. KERVIEL entered or had his trader’s assistant enter fictitious operations in the Eliot database “, facts which have moreover been recognized by Mr. KERVIEL, as will be developed below;
that the court notes moreover that the defense of Jerome KERVIEL has very long concluded on this point, which demonstrates its perfect understanding of the alleged facts, being recalled that this plea was not raised before the first judges;
that therefore this means must be rejected;
Considering that it is undeniable that the ELIOT computer system made available to Jérôme KERVIEL, to place his orders, which were then transferred to the various databases of the bank, is indeed an automated data processing system within the meaning of article 323-3 of the penal code;
Considering that Jérôme KERVIEL admitted having personally entered or had his assistant trader enter fictitious transactions in the ELIOT database:
“It is correct that I entered, I will say, hundreds, of multiple fictitious deals in the system in order to hide my positions and results … in the end I systematically canceled these operations, most often within three weeks. could leave them for a month or two, when I canceled them they were deleted in the different databases … I just deleted them in the Eliot database “
Considering that 589 fictitious operations were counted canceling latent positions and results induced by fraudulent positrons;
that they thus consisted of the seizure of:
* 55forwards and 18 options against internal counterparties (C // c /: Options) , in particular to hide the open positions of 30 billion constituted in 2007, transactions which fell into the Thétys or Thémis system of the back office and therefore in accounting, these thus having the advantage of not giving rise to any confirmation and of escaping gateway control; the said operations having, according to the accused’s own confessions , served to hide open positions, taken out of mandate, and the resulting latent result.
* 54 operations on shares processed in OTC against the internal counterparty “echupo”, to cover in 2005 its directional operations on the title “Allianz”, 126 against the counterpart “Click Options” and finally 66 against the “pending” counterparty , securities transactions which did not give rise to any confirmation, no margin call and were canceled a few days before their due date, before the back office control “took place;
* 262 purchases or sales of futures or deforwards against the “pending”
counterparty , also to hide its directional positions of 30 billion in 2007 and 50
billion in January 2008, operations which were mechanically dumped into the
buffer
base , making it possible to escape any daily checks by the middle office unit responsible for integrating transactions as well as back
office accounting and in particular margin calls;
operations whose materiality was recognized by Jérôme KERVIEL:
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“Very often, and on a regular basis, from memory from March-April 2007, I asked my assistant, Thomas Mougard, to enter fictitious operations, namely despending and transactions against Click Options as counterparty (forwards or purchase / sale of While pending transactions are common practice in order to materialize pending transactions, fictitious transactions with Click Options were not normal transactions , it could not have escaped Thomas MOUGARD that these last transactions were intended for hide open trades He acted only on my instructions (DUO);
“I could not declare the PNL of 1.4 billion because it was hidden by the entry of fictitious transactions even if it was visible in the treasury … On December 31, I canceled the PNL of 1.4 billion euros by entering purchases and sales of fictitious forwards , generating a loss of 1.4 billion euros. This was a fictitious loss which has no other purpose than not to reveal the NLP of 1.4 billion euros actually achieved on that date “;
Considering also that to hide the real frozen result, obtained during the unwinding of his fraudulent directional positions Jérôme KERVIEL entered:
* 115 pairs of transactions in the opposite direction of purchases / sales relating to securities (in particular Solarworld and Porsche shares) with a delayed value date (to hide the gain made in August) or on derivatives against counterparties “Click Options” or “pending” (to hide the gain of November 2007);
* 4 purchases and 4 sales of forwards against the “Baader” counterparty , transformed into 4 purchases and 4 sales of forwards against the ” Deutsche Bank” counterparty to hide the gain of 1.4 billion achieved in November 2007;
Considering finally that Jérôme KERVIEL entered provision flows in order to conceal his results generated in 2007; that thus nine transactions were recorded at a time when he was making the most significant gains; that these nine negative flows , the amounts of which fluctuated between 63 million euros on July 23, 2007 and 1,485,700,000 euros on January 10, were canceled the day after the seizure or in the following days, whereas such flows were not were not subject to any checks during the month;
Considering that in this capacity Thomas MOUGARD, assistant trader, who passed the flow of provision of 1,485,700,000 euros at the request of Jérôme KERVIEL explained: “especially last month, Jérôme was selling a product which generated a gain, the same day he spent a provision of the same amount which put his situation to Zero, the next day he made a reversal of this same provision, which canceled the provision of the day before and postponed his gain again, to hide this gain he made a purchase / fictitious sale in this case on Porsche which generated a loss of the same amount and therefore canceled its gain, resulting in a result of Zero “
Considering that, like the first judges, the court notes that it is indisputable that these fictitious operations, which were not based on any economic reality, had the effect of distorting the level of market risk reached by the fraudulent positions taken by Jérôme KERVIEL and its result as produced by the data of the ELIOT system feeding the information and accounting systems of the bank; it should be remembered that due to the entry of fictitious transactions, which revealed valuation or method, the middle office services had corrected them in accounting;
Considering that in order to try to exonerate himself from any responsibility Jérôme KERVIEL maintains that Société Générale was aware of the fictitious nature of its operations, that it was enough for that to refer to the declarations of Marine AUCLAIR “I wrote in black and white that ‘they were fictitious operations booked to balance the 2A in valuation and risk analysis .. these operations had no economic reality, but
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an economic interest … in fact PNL and ACFI knew that they were fictitious operations “.
Considering that while, of course, with regard to the fictitious transactions carried out by Jérôme KERVIEL in March 2007 (future counterparty pending and forwards against Click Options) and in April 2007 (future counterpart pending) the term fictitious transactions by Marine AUCLAJR has been mentioned , in particular in his email sent on April 16 to Messrs. Philippe BABOULIN and Martial ROUYERE ” his futures / forwards are fictitious transactions booked upon reaching the barrier on knocked warrants to balance the ptf in valuation and in AR as long as the recognition of the spot does not allow the redemption value of the warrant to be assessed “, it should be remembered that the defendant had succeeded in being sufficiently convincing to make believe, by false explanations, by a computer manipulation in the Eliot system aiming to change the characteristics of the so-called knocked warrants and finally by the delivery of false mails to justify the reality of the warrants, that these fictitious deals came to correct a flaw in the Eliot / front office system which was not able to correctly manage the warrants when the deactivating barrier was reached at the end of the month and the price of redemption of the warrant was determined at the beginning of the following month;
that it was thus deduced from the explanations of Jérôme KERVIEL, admittedly wrongly admitted by the control services, that his operations were intended to adjust to the accounting plan an economic reality that the front office system would not have been able to translate faithfully, which was reflected in the terms of the April 16 email from Marine AUCLAIR.
Considering that Eric CORDELLE, explained in front of the court, that the fictitious word was badly chosen, that it was in reality “a correction to make stick to reality”, Mrs. AUCLAIR specifying that it was indeed necessary to level certain modeling faults by several modeling operations materializing the economic reality of the product.
Considering that in this case the transactions carried out by Jérôme KERVIEL had neither reality nor economic justification.
Considering that the defense exposes that the Société Générale during the unwinding of the positions in 2008 had recourse to fictitious transactions of the same nature as those entered by Jérôme KERVIEL.
Considering that Société Générale argues to this end, that having chosen to maintain total confidentiality during the unwinding of the fraudulent position of 50 billion euros initiated by Jérôme KERVIEL in order not to expose the bank to a risk of Massive market speculation against it which could lead to a systemic crisis , in full compliance with AMF regulations, the bank had opted to maintain Jérôme KERVIEL’s fictitious operations for the duration of the liquidation, i.e. between January 21 and 23 2008 that since:
* Mr. Maxime KHAN, in charge of unwinding, who however did not know either the origin or the size of the position that he was to liquidate, gradually proceeded to the liquidation of 50 billion euros, within the limits authorized by the market ( -10%); * a member of the imitated “squadron” team, (which included a small number of people with knowledge of the fraud) spent at the end of the day a transaction fictitiously compensating, in the bank’s systems, the sales made on the market by Maxime KHAN, in order to neutralize them in the light of uninitiated people until the end of the unwinding – this procedure effectively amounted to canceling, via a reverse transaction, the fictitious transactions recorded by Jérôme KERVIEL, as and when the effective sale on the market of his fraudulent positions -;
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* at the end of the sale operations, on January 23 all fictitious operations were removed from the management bases, the neutralization of the massive positions of Jérôme Kerviel having become irrelevant;
Considering that the defense of Jérôme KERVIEL, cannot draw an argument from this procedure, quite exceptional, for the aforementioned reasons, to maintain that Société Générale usually had recourse to fictitious operations;
Whereas the defense further argues that the fictitious transactions entered by Jérôme KERVIEL for very large amounts, namely “forwards against the ” Click Options “ counterparty , which this entity had no mandate to process, and futures in counterparty “pending” which poured out and remained blocked in the buffer base , between 6 and 27 days while awaiting information on the name of the counterparty, could not fail to attract the attention of control services and only correspond to deals fictitious.
Considering that it will be briefly recalled that the examining magistrate during a transport in the premises of the Société Générale, (December 22, 2008) had noted:
– with regard to future pending:
that 1305 deals were blocked in the buffer base, that the back office was not able to detect the cause of the rejection, only the DML middle office service in charge of monitoring the “buffer base” could detect errors and that it appeared that the reconciliation of positions with market data could not reveal the existence of “futurespending” entered in the “buffer base”; that the DML middle office treated as a priority transactions “expected in the market” which was not the case for transactions “future pending” which do not did not exist in the market; than the deals pending future “ appeared in the status buffer basis” error “and that the field of ” broker “ in ELIOT was not informed;
– with regard to forwards vis-à-vis “Click Options”:
that these deals flowed directly into the Thétys database of the back office and appeared on the screen and, that in addition, the controls by the back office were carried out primarily on external counterparties and not on intra-group counterparties such as opposite to “Click Options”;
Considering that it will be emphasized that the controls only related to the unit price and not to the entire position and that the operations discharged into the ” buffer base ” represented several thousand billion euros.
Considering that it will also be recalled, contrary to what the defendant’s defense suggests , that the ELIOT base was in no way designed or intended to detect a fraudulent system; that this IT tool, made available to the front office, was intended to receive all the transactions processed by the trader ; that in this respect Thomas MOUGARD declared “it is true that at the level of the Eliot system there is no control which would be of a nature to alert on an incoherent entry in so far as the compulsory fields are filled in”;
Considering that the daily reports , available to the manager, only showed the net exposure and, since the directional positions of Jérôme KERVIEL were completely covered by the fictitious positions not showing any exposure to risk, the manager was not very motivated to dissect all the operations of his trader; it should also be noted that on the perimeter of the accused had been counted over the year 2007,100,000 transactions / îtfwras, or 800 per day.
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Considering that the defense further argues that the practice of introducing fictitious transactions into the ELIOT base to hide the result was a classic and usual practice at Société Générale;
Considering thus that the first judges correctly noted, the fact that Thierry RAKOTOMALALA and Ouachel MESKJNE, participated in two transfers of results initiated by Jérôme KERV1EL in December 2007, does not allow to consider that these practices were “current and known” of Société Générale, especially since they resulted in the dismissal of the two trader, accompanied by a transactional protocol.
Considering that it appears in view of these developments, which Jérôme KERVIEL knowingly introduced into the ELIOT system , fictitious data, namely fictitious stock exchange orders , without any economic reality, which he subsequently canceled, the said data intended in particular to eliminate its exposure to market risks and to mask its out-of-mandate and out-of-limit commitments.
that therefore the offense referred to prevention is established in all its elements with regard to the accused;
that consequently the referred judgment will be confirmed on this head.
/// – On fakes and usase of fakes
Considering that Jérôme KERVIEL is accused of having fraudulently altered the truth, alteration likely to cause prejudice to Société Générale, and accomplished by any means whatsoever, in writing or any other medium of expression of the thought which has as its object or which may have the effect of establishing the proof of a right or of a fact having legal consequences, in this case by the creation of seven electronic mails which committed the bank in accounting, financial and legal terms (…) And to have made use to the detriment of Société Générale of the so-called false ones;
Considering that Jérôme KERVIEL acknowledged having been the author of all seven emails transferred to the internal control bodies of the bank, aimed at prevention, by making them from previous emails actually received from the same correspondents and to the ‘without the latter “I do not dispute having made false e-mails, having used the correspondents header, to do this I used previous mails from these correspondents by keeping the header and changing the text ( …) I used these emails to justify fictitious transactions concluded with third parties “;
Considering that the false e-mails established by Jérôme KERVIEL, under the heading of Constanza MANNOCHI, bearing the dates of April 11 at 18 Hl April 1 and April 12, 2007 at 1:11 p.m. were transferred by the latter to Sébastien CONQUET, on May 11, 2007 , in the context of the April 2007 closing of accounts, for the purpose of justifying two fictitious purchases of warrant on the DAX at a determined price, which according to his false explanations had not been entered in Eliot resulting in a bridge deviation of 13.9 million (artificially increasing its result); that the said emails were intended to obtain an accounting adjustment of this amount;
Considering that still in the context of the April 2007 closing of accounts, Jérôme KERVIEL, to support his false explanations according to which – due to an entry error in the price of two deactivated Clearstream warrants, his result was wrongly undervalued to the tune of 156.8 million, and that he was fighting with the Italian stock exchange to obtain the right value dates – made up a fake email under the Lorenzo BOTTI heading of BNP Paribas in Milan, dated 30 April 2007, reporting – a delay in the registration of five knocked-out products whose booking was to take place
Court of Appeal of Paris – pole 5 – room 12 – n ° rg 11/404 – judgment rendered on October 24, 2012 – Page 89
end of May, postponement of seizure due to a technical malfunction attributable to BNP Paribas – then sent this false email to Sébastien CONQUET on May 16, 2007;
that his bad faith is particularly established by the terms of the explanatory email sent to Sébastien CONQUET ” the value date will be at the end of May. I have been fighting with them for a month on the subject (…). The deal has was deleted yesterday because the people at the exchange called me to tell me that it will be done on May 28th. I will rebook it today because I am waiting for the correct trade date. I ask them for a confirmation of their leave if you need it “;
Considering, that within the framework of the closing of the accounts of June 2007, Jérôme KERVIEL transferred, on July 6, 2007, to Sébastien CONQUET, under the heading of Christophe de la CELLE of Deutsche Bank a false email dated June 15 2007, titled ” ‘trade details DAX ForwardRoll Over’ \ intended to justify to the accounting services a change of counterparty é ‘\ mforward initially entered in front of the counterparty “Click CLV blocked at the back office pending identification of the client , then facing “Click Options ” then generating a gateway deviation during intra-group reconciliation,then finally, against the Deutsche Bank counterpart, thus eliminating the bridging gap at the level of intra-group reconciliation and allowing Sébastien CONQUET to validate the intra-group accounting adjustments;
that however, from July 9, Jérôme KERVIEL, after being questioned by the back office collateralisation team , the German bank not having recognized the transaction, sent them a fax indicating that the decision had been taken ” to remodel this deal in listed in the day “, which was not done, since the operation was fictitious from the beginning, the latter having canceled it outright in the Eliot system on July 19, after having thus managed to pass all the controls which were closed on July 18th.
Considering that this deal with Deutsche Bank, which entailed a counterparty risk, had drawn the attention of Mr. FROSSASCO, in charge of the counterparty risk, who informed Jérôme KERVIEL, who forwarded him on July 19, 2007, an email under l header from Christophe de la CELLE, dated June 15, 2007 and entitled “trade details DAX future Roll overs” which confirmed the “cross on DAX futures and explained the other booking error ;
that the attached explanatory email was thus worded “it is a cross of listed badly booked in Eliot. The counterpart was in OTC the modification was made on our side to be finally confirmed in listed as initially processed. My middle did a modification on the deal to rebook it wrongly in OTC lately it is corrected this evening “;
that ultimately Jérôme KERVIEL did not understand this new deal, since from the start these operations were fictitious; however, these false e-mails enabled him to validate, during the necessary checks, the changes in counterparties, before canceling them, then entering new ones.
Considering that still within the framework of the closing of the accounts for the month of June 2007, an income difference was identified during the inter-group reconciliation at the rate of 2 forwards and 5 options against Click Options that the latter did not recognize; that to correct this deviation after several reminders checks services that crowded, Jerome KERVIEL, claiming it was a mistake booking, was transferred on 12 July 2007, Sébastien CONQUET, false email dated June 28, under the heading of Amanda HALLAM from the bank JP MORGAN (confirming the transaction) to which was attached an email from “I confirm that the OTC spreads are against Deutsche Bank and JP Morgan. Here is already the detail on the 3 trades I reforwards the confDBK in the wake”;
