Reuters reported that Societe Generale insisted it also should not be held accountable through the suit for letting executives execute insider trading deals. Bank officials said in a federal court filing that there is no proof that individual defendants knew of Jerome Kerviel’s rogue trading, and that probes showed he “actively concealed his activities from his superiors and deliberately circumvented Societe Generale’s control structure.”
As to the revelations of debt losses, Societe Generale said U.S. securities law does not allow “fraud by hindsight claims.”
Led by the Vermont Pension Investment Committee, shareholders had contended the bank, former Chief Executive Daniel Bouton, and other officials ignored dozens of warnings about Kerviel whose activities led to a 4.9 billion euro ($6.62 billion) loss in January 2008 (see French Trader Blamed in Societe Generale Scandal to Go to Trial).
The shareholders also said Societe Generale hid its holdings in residential mortgage-backed securities and collateralized debt obligations, and should have taken greater losses before posting a 2.05 billion euro ($2.77 billion) writedown the same month.
The bank also said the lawsuit has “no place in an American court” because it involves a French company, several defendants who are French citizens and live in France, and securities listed and disclosures made in France.
The shareholder case is In re: Societe Generale Securities Litigation, U.S. District Court, Southern District of New York, No. 08-2495.