French bank SocGen ordered to pay rogue trader who almost ruined it

French rogue trader Jerome Kerviel.
French rogue trader Jerome Kerviel.PHOTO: AFP

PARIS (REUTERS) - A "rogue trader" who cost French bank Societe Generale billions of euros in losses won a wrongful dismissal case on Tuesday (June 7) when a labour court ordered Jerome Kerviel's former employer to pay him 455,500 euros (S$699,000) in compensation.

The court, made up of equal numbers of employers and trade union representatives, ruled that the bank fired Kerviel without "real and serious cause" because it waited too long to dismiss him after becoming aware of his misconduct.

SocGen lawyer Arnaud Chaulet branded the ruling "scandalous" and said the bank would appeal against a decision he said ran counter to the law.

France's labour code gives companies two months to sanction misconduct. The bank has said it discovered Kerviel's trading positions in January 2008. It fired him one month later.

"Societe Generale knew about Mr Kerviel going over trading limits well before January 18, 2008," the court said in the ruling, seen by Reuters.

"An employer may in no case invoke an act of misconduct (as a basis for dismissal) if it has previously tolerated exactly the same situation and behaviour by maintaining the contractual relationship without drawing on it at the time as grounds for disciplinary action," the court said.

Kerviel, 39, was sentenced to three years in jail after being convicted by a Paris court in October 2010 of breach of trust and fraud in the loss of 4.9 billion euros in equity derivatives trades that went terribly wrong in 2008.

Tuesday's ruling added fuel to the controversy over the role of labour courts after the Socialist government dropped an attempt this year to limit by law the amount of damages they can award for wrongful dismissal.

The trader has never denied building up trading positions amounting to 50 billion euros, but contends his managers should have been aware of his actions, something the bank has always strenuously denied.

His lawyer David Koubbi told Reuters the decision "restores justice and tears apart the story that Societe Generale has presented from the beginning."

The ruling comes as Kerviel faces a separate civil case due to start next week before an appellate court in Versailles about how much he has to pay the bank towards the losses.

France's highest court of appeal upheld Kerviel's jail sentence in March 2014, but ruled that he was not liable for 4.9 billion in damages sought by the bank, opening the way for the civil trial to determine a fine.