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Business News

'London Whale' boss arrested but pledges to fight extradition to US

The supervisor of the JPMorgan trader nicknamed the London Whale was arrested in Spain yesterday in the latest development in the investigation into how the UK-based trading team at the US bank lost more than $6bn (£4bn).

Javier Martin-Artajo, a Spanish citizen, was the supervisor of Bruno Iksil, the man given his "whale" nickname due to the vast size of his trades and ability to move the market.

US authorities issued a warrant for his arrest nearly two weeks ago, and that of his former colleague Julien Grout last Wednesday on charges including conspiracy, wire fraud and faking accounts.

The prosecutors, led by the US attorney for the Southern District of New York, Preet Bharara, allege that the two men hid hundreds of millions of dollars of losses.

Mr Iksil, who was also known as Voldemort among traders, has avoided prosecution and is thought to be helping Mr Bharara's team gather evidence.

Mr Grout, a Frenchman, is yet to be arrested and is thought to have been junior to Mr Iksil in the bank.

The US criminal charges claim that London traders in the bank's chief investment office were policed by one employee who gave the trading team extremely wide leeway when they valued their trading bets. This violated JPMorgan's rules.

Spanish police said: "The arrested person is presumed responsible for manipulating and inflating the value of positions in the synthetic credit portfolio of his firm with the aim of achieving specific objectives of daily losses and gains." Mr Martin-Artajo was released from police custody yesterday after telling a Madrid court he opposed attempts by the US to extradite him. Both he and Mr Grout face possible 20-year jail sentences if convicted.

Winners and losers

"The stupidest and most embarrassing situation I have ever been part of" was how JPMorgan chief Jamie Dimon described the London Whale scandal at his bank. Well might he have been embarrassed.

When media reports of billions of dollars of losses emerged out of its supposedly risk-hedging chief investment office, Mr Dimon dismissed the stories as "a tempest in a teapot". Soon, though, estimates of the losses rocketed and he was forced to backpedal.

The hedge fund manager Boaz Weinstein was among investors who made hundreds of millions of dollars trading against Mr Iksil. He is said to have spotted JPMorgan's mess-up from his own prior experience at Deutsche Bank running a trade that went horribly wrong.