Jérome Kerviel : Rogue Trader or Misguided Employee ? What Really Happened at the Société Générale?

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Personal ethics refers to the ethics that a person identifies with in respect to people and situations that they deal with in everyday life.

Professional ethics refers to the ethics that a person must adhere to in respect of their interactions and business dealings in their professional life.

Individualists - driven by personal survival and preservation. The self is the source and justification of all actions and decisions, Convincing yourself that Nobody will ever find out what you’ve done

● Jerome kerveil seems to be individualist who cashed on loose internal controls of society general ,His individualism may be influenced from the following factors, such as -

○ Negative life experiences

○ overly aggressive financial or career objectives

● Professionally Jerome kerveil appears to be sound about his profession but due to his individualism his professional ethics got washed away. He convinced himself that Nobody will ever find out what he has done which lead to breach of trust. Due to his Overly aggressive financial or career objectives. He indulged into scandal at the stake of the company

● Kerviel admits to exceeding his credit limits, but claims he was working to increase bank profits. He even states that his actions were known to his superiors and that the losses were caused by panic selling by the bank. This shows that he isn’t guilty for the crime he

has done.

● He admits his actions were also practiced by other traders in the company. He could have reported this scam to his senior management rather than taking this as an advantage. whistle blowing should be his course of action instead he mentioned himself as a " scapegoat ".

● Good professional ethics accompanied by personal ethics might made him a whistleblower.

Q7.If you had been Jérome Kerviel, what would you have done? Compare your personal and professional ethics.

If I were Jerome Kerviel, I would not have done the unethical practices which Jerome Kerviel did. I would have tried my best to maximize profits for the bank and increased chances for my career growth in every possible way, but strictly within the framework of the ethics guidelines of the company. My ambitions have to be in-line with the ethics charter and values set by the company. My personal ethics style is that of a Pragmatist. As an individual I might be concerned primarily with the situation in hand and not with self or others. This style more focuses more on the context on hand. But my professional ethics style would be non- consequentialist, rooted in the principle of “deontology”. I believe that as an employee of Societe Generale, I am bound by the values of ethical conduct that is enshrined by the organization in the strict “code of conduct”. As per deontology, my ethical decisions should be based on my duties and rights. In this case the organization has very strict guidelines put into place and they conduct extensive trainings to reinforce the importance of that. The charter is not prepared in such a way that it just caters to the local law requirements, but tries to cover high ethical standards set by company. Even though I know that my senior management is quite open to overlook these ethic rules, I as an employee should not take these decisions based on the personal preferences or style of the individual leaders who are in position at that moment in time(eg- CEO, board members or direct line managers). Though I am a pragmatist based on my individual style, there is no way I will try to analyze this particular situation based on my personal preferences. There will be no conflict. I will just go by my professional instinct which is to obey fully the company code. That’s what’s expected from me as an employee of Societe Generale. In this situation I would not have done unethical acts like falsifying bank, trading recors records, computer fraud and creation of a fictitious company. If the senior management had “specifically “asked me to do an unethical act and if its in violation of the code of conduct and charter of the company I will not do it, because its in direct conflict with my professional ethics. If I get a specifically directed order like that I will have no hesitation in saying a clear “NO”to the senior management. I think this clearly demonstrates the intense commitment I have towards my duties and obligations and never allowing my personal judgments or preferences to anyway come in the way of my professional ethics.

Q8. What are the lessons you learned from this case?

One of the main lessons from this case is that even if a company has got the best ethical standard guidelines written eloquently and communicated well, until and unless there is a culture of ethics in the organization it will not be of much use. Here we can clearly see that one of the main drivers which led Jerome Kerviel to indulge in this type of extremely fraudulent trading activities is the belief that his senior management is silently supporting him. His high risk trading activities went just unchecked for about 2 years inspite of the fact that compliance team members were monitoring the trading activities. Its amply clear that the compliance team had redflagged the risky bets and fraudlent trades which Kerviel was doing, but they were conveniently ignored by senior management. As long as Kerviel was making significant trading gains and thus enhancing the profitability for company, management was fine with it, even though ethics part was questionable. One of the most shocking aspect was when the board of directors rejected the resignations of co-CEO Bouton and second in command Phillipe Ceterne.As all the information suggests that these senior leadership was aware of this, they should also have been made responsible for this fiasco. But, totally letting them go free is a bad precedent. This view has been reinforced owing to the comments given by the then President of France, Nicolas Sarkozy. He also stated that board of directors should take action against senior management, including Bouton. Another interesting point is the way French Government tried to intervene and prevent a hostile takeover of SocGen. The position taken by European Union was clearly more sensible and hinted that Government should not try to give any preferential treatment to the bank and should apply the same rules as for everyone else. That would have given a signal to the leadership of all major companies that it’s their responsibility to ensure that principles of ethics are maintained