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What did Jerome Kerviel do that brought him so much debt?


Jerome Kerviel was making over $60,000 annually while working as an arbitrageur at the Société Generale, a renowned  French securities firm. Between the periods of 2006 – 2008, the firm’s manager had found out that Kerviel cost the company billions by undertaking a series of illicit trade activities.

Kerviel was born in Pont l’Abbe in the northwestern part of France in 1977. He has a degree from the University of Nantes in 1999 and also earned his master’s degree at the University of Lyon in 2000. He subsequently got the opportunity to work with Societe Generale at the compliance department the same year. He was 23 at the time. Soon after, he became a junior arbitrage trader at the firm.

His job was to take advantage of pricing discrepancies between stocks listed on more than one exchange market and buying the undervalued shares on the exchange and sell them on another exchange where the price is higher.


Photo Credit: Franceinfo

With his experience and expertise, Kerviel was able to hack the firm’s risk surveillance system and made many one-sided high-risk unauthorized trades which made him about $20 billion worth of profit in 2007. In the subsequent year, Kerviel entered a series of fake trades in order to generate losses with the intention to cover up his misdeeds but shortly after, the bank noticed that some of his trades had exceeded the bank’s risk threshold. Before long  Kerviel’s fraud had become obvious and he got fired.

Jerome Kerviel’s unauthorized trades had led to a loss of $7.2 billion for the firm and was later charged for breach of trust and causing financial loss to the company in 2010. He was sentenced to 3 years and was ordered to play €4.9 billion. He only served a few months in prison in 2014 and the amount was reduced to 1 million.

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