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Who Was to Blame?

The two years between publication of the two investigative reports into Kernel's unauthorized trading and his trial were tumultuous for U.S. and European banks. A steady succession of huge asset write-downs, government bailouts, liquidity lifelines, and arranged takeovers of once-proud banks and insurance companies took place. Stock and housing prices tumbled, unemployment soared, and the U.S. and European economies slipped into recession. After multilateral government stabilization measures began to take effect, lawsuits began to emerge alleging dishonest lending and securitization practices. As Kernel's June 8, 2010, trial date neared, Societe Generale kept a low profile. Kerviel, on the other hand, sought to publicize his assertion that Societe Generale unofficially endorsed his directional trading, with the publication of a book entitled The Spiral: Memoirs of a Trader.

Exercise

Now begins the interactive portion of this case study. The preceding narrative and exhibits have presented key facts that were publicly known at the beginning of Kerviel's trial. Whether or not the information they provide is conclusive one way or another is up to the reader to decide. In a real trial, prosecution and defense attorneys methodically lay out their respective evidence and arguments. To facilitate the reader's assessment of both arguments in this case study, a blank Critical Questions table is provided in Exhibit 23.6. The purpose of this table is for the

Exhibit 23.6 Critical Questions and Answers – Worksheet

Question

Answer Implying Guilty

Answer Implying Not Guilty

1

2

3

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5

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9

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11

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reader to list critical questions that the trial judges should have asked in order to determine the truth behind each party's claims, and then to identify answers that would incriminate ("Guilty") or exonerate ("Not Guilty") Kerviel. Once this exercise has been completed, the reader may turn to Part Two.

 
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