18 May 2014

Falling from Grace with Grace

Jérôme Kerviel is alluring and easy on the eye. He cultivates a sharpened edge these days and may look like a rugged fashion model on a casting for Davidoff Cool Water but he's certainly not being portrayed as a role model or some counter-culture hero by the media. He's the disgraced trader from French banking institution Société Générale (SocGen) that is miraculously celebrating its 150 years of trading (short of a resurrection after the 4.9 billion scandal losses directly imputed to JK back in early 2008).

Easy come, easy go? (Pict source)

2008 was a busy year. Europe and the US were bracing themselves for the first chills of the latest recession to date with the demise of Lehman Brothers and Bernard Madoff, the collapse of toxic loans and burst of the property bubble. It was also the year I got made redundant from my fancy Marketing job in the UK. Yeah 2008 was indeed one of those years.

While all of the above was crescendoing to the fore, Mr Dangerflirt had executed a few ill-advised high-risk moves across the financial chessboard that would bring SocGen, his employer, to the brink of a financial fall from grace. Six years later, does that still stigmatise him as a villain? Not in my eyes nor to those scores of keen supporters gathered along his publicised redemption pilgrimage that took him to and from Rome, where he met Pope Francis.

I do actually like JK as a person, his humility, humanity, dignity and quest for redemption and reinvention. He has learnt from his mistakes and he wholeheartedly accepts his share of responsibility in the financial demise. Having said that, I do not condone his actions as a trader. With the blessing of his industry, his chosen profession intrinsically praises a culture of fast cash at all cost - the dirty side of capitalism. The profession encouraged and incentivised him highly for playing cavalier risk-taker with investment funds that would yield him those juicy bonuses and deliver the sky-high dividends to his employer. While the profits were rolling in, it was win-win for the trader-employer combo. Then sh*t happened.

Never vanished nor vanquished! (Pict source)

What I do find villainous and hainous is how SocGen, which had allowed for the shady 'best practices' to take place in its offices, was quick to ostracise, victimise and repudiate its flagship trader for those losses. Yesterday's star became a scapegoat, pure and simple. However losses were to be expected as they come hand in hand with the volatility of the territory. As compensation, the highly-strung SocGen demanded that the trader paid back the 4.9 billion losses it had incurred. The decision was later overruled by the courts.

It's been a long drawn-out courtroom drama affair. Today JK faces a 3-year prison sentence once he crosses the Italian border back to France and he has now appealled to the French President for the case to be reviewed, his innocence claim to be heard, witnesses to be guaranted protection and allowed to testify, and his accomplices to be brought to justice. I wonder whether the justice system will decide to finally see eye to eye as it is always easier and more convenient to bring one isolated man down and shut him up than a bunch of top guys from an influent institution that is connected to the smoke screens of stock markets and the lofty world of politics.

Up in smoke? (Pict source)

Here's a guy fighting a system that made him a star player and unmade him once losses outperformed the wins. These were probably the implicit rules of the game. Off with a Baguette Magique ponder: in order to be both financially and professionally successful, should a trader be nothing short of a financial trickster and a rogue - after all?

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