JP Morgan: Charges Over $6bn 'London Whale'
Officials in the United States have charged two ex-JP Morgan traders over the so-called 'London Whale' scandal that resulted in losses of $6.2bn (£4bn).
Prosecutors in Manhattan accused former London-based traders Julien Grout, 35, and Javier Martin-Artajo, 49, of wire fraud and a conspiracy to falsify books and Securities and Exchange Commission (SEC) records, according to court papers.
The charges are the result of an investigation into events surrounding the losses in the London division of JP Morgan's chief investment office.
"This was not a 'tempest in a teapot', but rather a perfect storm of individual misconduct and inadequate internal controls," prosecutor Preet Bharara said at a news conference on Wednesday.
The case, filed in federal court, claims Grout and Martin-Artajo deliberately tried to hide hundreds of millions of dollars in losses on trades in a portfolio of synthetic credit derivatives.
The charges focus on investments whose components were supposed to be marked at their market value each day as best as the bankers could approximate.
The mounting loss eventually topped $6bn and was attributed to trader Bruno Iksil, who was dubbed the 'London Whale' for his location and the super-sized bets he made.
Prosecutors confirmed that they had agreed not to prosecute Mr Iksil but the deal requires him to cooperate fully with officials.
The charges say that from March to May 2012, following Martin-Artajo's direction, Grout began using prices for the portfolio "deliberately chosen to minimise losses rather than represent fair value," the SEC said.
Lawyers for both men have previously stated that their clients did nothing wrong.
A JP Morgan spokesman declined to comment on the case.
It is understood that Spanish national Martin-Artajo supervised JP Morgan's trading strategy in London while his French colleague recorded the value of any bad investments.
Mr Bharara said his office had contacted the two men's lawyers.
"We are hopeful they will do the right thing and present themselves in the United States," he said.
The prosecutor added that it was a "rare" non-prosecution deal for Mr Iksil, who is no longer a trader.