Former JPMorgan manager arrested over ‘London Whale’ charges
Ex-JPMorgan manager Javier Martin-Artajo was arrested in Madrid Tuesday morning on attempts to conceal losses and falsify records related to the infamous ‘London Whale’ scandal. Martin-Artajo handed himself over to the police after being charged earlier this month by US prosecutors. Along with JPMorgan (NYSE:JPM) employee Julien Grout, Martin-Artajo faces charges of deliberately trying to conceal hundreds of millions of dollars worth of trade losses from the JPMorgan’s Synthetic Credit Portfolio between March and May of 2012. Martin-Artajo oversaw JPMorgan’s trading strategy at the bank’s London office, where he was involved in transactions that resulted in the loss of billions of dollars.
Martin-Artajo was released from custody shortly after his arrest, reportedly telling Spanish officials he isn’t willing to be extradited to the United States. The 49-year old ex-banker is wanted by the United States on charges related to fraud and tax crime. Under the terms of his release, he will not be allowed to leave Spain, and will be required to make court appearances every 15 days.
A number of investigations examining JPMorgan’s risk management system and internal controls were under way shortly after the London Whale scandal, which resulted in the loss of some-$6.2 billion via a series of derivative translations involving credit default swaps. The bank’s initial trading loss was estimated at $2 billion, with people like Martin-Artajo and Grout attempting to cover up the extent of the trade deficit.
Currently residing in his home country of France, Julien Grout has not yet been arrested, according to his US lawyer Edward Little. According to Little, it’s unlikely Grout will face charges on US soil, as France doesn’t extradite its own citizens. Grout is reportedly the lowest-ranked former JPMorgan employee targeted by US officials.
Meanwhile, Bruno Iksil, who was nicknamed the “London Whale” for his role in executing the trades while lurking beneath the surface, is cooperating with US authorities. Iksil doesn’t currently face any charges.
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