JPMorgan duo facing 'London Whale' charges
US prosecutors target former traders at London-based unit that racked up huge losses
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Thursday 15 August 2013
The investigation into the botched “London Whale” trades that saddled JP Morgan with billions of dollars in losses took a new turn yesterday after prosecutors in the US filed criminal charges against two of the bank’s former traders who worked at the London-based unit at the centre of the affair.
Javier Martin-Artajo was a managing director at the bank and senior trader at its chief investment office (CIO), the division where the losses occurred, while Julien Grout was a junior trader in the same unit. Both are facing charges of conspiracy to falsify books and records, to commit wire fraud and to falsify filings with the US Securities and Exchange Commission.
They worked with Bruno Iksil, the trader who made the ill-fated trades, and who became known in the markets as “London Whale” for the massive bets.
Mr Iksil is cooperating with authorities and has not been charged. Government lawyers have entered into a non-prosecution agreement with Mr Iksil.
The botched derivatives trades left JP Morgan with losses in excess of $6bn, putting the bank and its high-profile chief executive, Jamie Dimon, under a harsh spotlight as questions were raised about the lender’s management and oversight practices. The trades also led to the departure of one of Mr Dimon’s closest deputies, Ina Drew, who was the bank’s chief investment officer when the losses occurred.
JP Morgan is currently believed to be in talks with the SEC about a possible settlement with the watchdog as it looks into the circumstances of the loss. Recent reports in the US suggest that the SEC is seeking an admission of wrongdoing from the bank, which is America’s largest in terms of assets.
Announcing the charges against Mr Martin-Artajo and Mr Grout yesterday, the US Attorney for the Southern District of New York, Preet Bharara said the Whale affair was not simply “a tempest in a teapot, but rather a perfect storm of individual misconduct and inadequate internal controls.”
The attention now is on efforts to bring the accused individuals to court in the US. Earlier this year, Mr Grout moved back from London to his native France, while Mr Martin-Artajo, who is currently on vacation, is based in the UK.
The former case is likely to prove the trickiest, as France usually shields its citizens from extradition. Mr Grout’s lawyer, Edward Little, has previously said that his client moved to France for personal reasons after failing to find employment in the London, not because he was anticipating any charges, and was in the US on vacation as recently as last month. Mr Little did not immediately respond to a request for comment yesterday. According to Reuters, Mr Grout is residing at his parents holiday home in the small French village of Sarrazac.
In London, Mr Martin-Artajo lawyers at Norton Rose Fulbright said he was “currently on a long planned vacation and will be returning to the UK as scheduled.” “Mr. Martin-Artajo is confident that... he will be cleared of any wrongdoing,” they added in a statement.
- 1 Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
- 2 Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
- 3 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 4 The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
- 5 Magna Carta will be 800 years old next year – the perfect reminder of the rights and freedoms we must hold dear
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
UK weather: Warning for more snow and ice as freezing temperatures and gales hit Britain
Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
UK weather: Travel chaos continues as King's Cross train delays add to snow on roads
The Unluckiest People of the Year 2014 (and one very unlucky giraffe)
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
Immigrants make UK racist, says Ukip councillor Trevor Shonk
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...