BREAKINGVIEWS - Kerviel: the crime that really didn't pay

Former trader Jerome Kerviel (C) arrives at Paris courts for the verdict in his trial to face charges of breach of trust, computer abuse and forgery October 5, 2010.

-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --

By Chris Hughes

LONDON (Reuters Breakingviews) - French courts know the meaning of "crime doesn't pay". When Jerome Kerviel completes his three-year prison sentence for racking up massive derivatives losses at Societe Generale, he will face a demand to repay the 4.9 billion euros his trades cost the bank. Even with a book deal, a Hollywood movie spin-off and return to employment in the next trading boom, he stands no chance of clearing the debt. Barring a successful appeal, the affair has ruined him.

It may seem like rough justice to single out Kerviel. A refugee from the back office, he was never a superstar trader. True, he engaged in fake trades to cover up the fact that he was making massive unauthorised and unhedged bets with the bank's money. But the fine dwarfs any gains he made before he was exposed.

SocGen survived the scandal -- partly thanks to a rescue rights issue -- but its supervision was shown to be woefully deficient. Though Kerviel's sentence proves that he acted alone, the bank failed to uncover his trading for well over a year.

He should not be a poster child for the financial crisis. Disasters that followed exposed bigger and more systemic failures. The greed and poor risk management that saw banks cram their balance sheets with toxic debt brought the financial system to the brink of collapse.

Kerviel put SocGen in jeopardy. But collectively, other bankers and traders brought down entire firms, landed states with bailouts and contributed to a recession that has put millions out of work. Almost none of them are likely to face charges, let alone be asked to repay the losses they caused.

Kerviel has paid a dear price for his crime. Many will conclude that if you want to wreak financial havoc, it's better to do so legally.

CONTEXT NEWS

-- Former Societe Generale trader Jerome Kerviel was sentenced on Oct. 5 to five years in prison, including two years suspended, for his role in a trading scandal that cost the bank close to 5 billion euros ($7 billion). A Paris court also ordered 33-year-old Kerviel to reimburse the French bank 4.9 billion euros lost in unauthorised trades which brought Socgen to the brink of collapse in 2008.

(Editing by Peter Thal Larsen and David Evans)