At the end of a highly publicized trial, Jérôme Kerviel was finally sentenced to 3 years in prison by the French courts for breach of trust, forgery and use of forgery. He must also pay one million euros in damages to Société Générale.
The broadcast of the series is an opportunity to return to the repercussions of the Kerviel affair. Scandal fueled fear of ‘lone wolf’ in financial sector, says The Echoesreferring to a person who acts alone, with a predatory mentality and with the aim of only serving their interests. According to the media, this fear has led to a significant strengthening of the control processes of financial institutions around the world.
For example, following the Kerviel affair, several banks forced their employees to take vacation. In fact, at the time of the events, Jérôme Kerviel was not taking leave in order to prevent anyone else from being able to follow his operations.
Financial institutions have also adopted processes to allow employees to report suspicious or aggressive behavior, reports The Echoes. When he was frustrated, Jérôme Kerviel had the habit of smashing his computer mice on his desk, reveals the documentary “A trader, 50 billion”. Such behavior would no longer be tolerated today.
Since 2008, many firms have set up anti-fraud teams to identify suspicious movements. Several of them use artificial intelligence to increase transaction monitoring, says another source. Sanctions against employees who do not comply with control processes have been strengthened. At some banks, targets for market traders have been lowered to make them easier to achieve and reduce the pressure on an employee to bend the rules.
Since the Kerviel affair, the role of regulators has evolved. They are now responsible for testing control systems directly in banks in order to verify the behavior of traders, reports an analyst. The bonus system is also better regulated. Finally, in France, the law distinguishes activities carried out on behalf of a client from those carried out for a bank’s own account.
With these concerns in mind, regulatory authorities do not hesitate to heavily sanction banks that fail to put in place adequate control measures to reduce fraud. The United Kingdom’s Financial Conduct Authority (FCA) recently imposed a fine of $22 million on the London branch of the Australian bank Macquarie after a trader recorded hundreds of fictitious transactions between 2020 and 2022, according to Reuters. The American bank Citi was fined $80 million last May for lack of controls which allowed one of its traders to place erroneous orders.
