The trading desk on which Jérôme Kerviel worked at Société Générale exceeded trading limits “quite frequently”, the former trader’s manager told a Paris court on Monday.
Eric Cordelle, Mr Kerviel’s immediate supervisor at the French bank, denied knowledge of the €50bn of unhedged positions built up by the 33-year-old in January 2008, saying he was overworked and had neither the resources nor the tools to monitor individual traders’ positions.
Speaking on the ninth day of the trial of Mr Kerviel, who is blamed by SocGen for €4.9bn of losses it incurred when selling off the exposed positions, Mr Cordelle confirmed that the desk’s €125m trading limit “was, on this team, fairly frequently exceeded”, with up to €200m being traded on some days.
But he added that this was usually for technical reasons and he had not known of a trader intentionally overstepping the mark.
“The problem wasn’t whether he [Mr Kerviel] gained or lost; the problem is the lying,” he told the court, adding that when asked about anomalies in trading patterns, “Jérôme was always able to come up with reasons, convincing explanations.”
Mr Kerviel faces up to five years in jail and heavy fines if he is found guilty of breach of trust, computer abuse and forgery. He admits to building up €50bn on futures markets and hiding his trades with fictitious positions, but maintains that his superiors knew what he was doing and that it was commonplace to exceeding trading limits.
Mr Cordelle said he was contesting SocGen’s decision to fire him for “insufficient professionalism” in 2008, citing a “lack of resources and training”.
He had been recruited to manage the trading desk after a stint with the French bank in Japan, where he had acquired knowledge of client needs. “I had complementary skills but I was not a trader – I did not know the vocabulary of trading,” he said.
The desk was staffed with young traders and Mr Kerviel, then 31, was one of its senior members. He was “serious” and had been presented to Mr Cordelle as “someone who worked well, who was productive.”
There was no risk-reporting system for traders on the Delta One trading desk when he joined the team in 2007, and implementing regular reporting “was not a priority”, Mr Cordelle said. One of his priorities included recruiting staff for the rapidly expanding desk.
“I remember a trader who broke his nose one evening and came to work with a broken nose the next day because he did not have the choice – there was too much work,” he said.
Daniel Bouton, former chairman and chief executive of SocGen, who eventually resigned after criticism of his handling of the trading scandal, is to testify on Tuesday.
He will be the last witness to appear before summing up in the third and final week of Mr Kerviel’s trial.
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