MADRID — A former JPMorgan Chase Co. trader wanted by the United States for allegedly falsifying bank records to cover up $6 billion in trading losses was arrested in Madrid Tuesday, Spanish police said.
A statement said Spaniard Javier Martin-Artajo, 49, was arrested after he presented himself to police in Madrid, who had located and asked him to turn himself in.
U.S. prosecutors earlier this month filed criminal charges against Martin-Artajo and another ex-JPMorgan trader, Julien Grout.
The two were accused of marking up the market value of an investment portfolio to hide its plummeting value. The portfolio eventually incurred a $6 billion loss for JPMorgan, the biggest U.S. bank by assets. For months following its disclosure, the shortfall was attributed to Bruno Iksil, a trader who became known as the “London Whale”.
Martin-Artajo was taken before a National Court judge, who released him without bail after an hour of questioning but prohibited him from leaving Spain without permission and ordered him to appear in court every two weeks.
A court spokesman said Martin-Artajo denied the U.S. charges, saying they were based on a false accusation. He said he will challenge any extradition request.
The United States now has 40 days to formalize the request.
Martin-Artajo were both based in London when they worked at JPMorgan. Grout is a citizen of France.
Edward Little, a New York-based lawyer for Julien Grout, told the Associated Press that Grout is in France and currently negotiating his possible return to the US with the US attorney’s office in Manhattan.
“Julien returned to France several months ago for financial reasons, he’s not a fugitive,” Little said. “France doesn’t extradite its citizens.” Little said that Grout has not yet decided whether he’ll return to the US.
U.S. Attorney Preet Bharara said this month they had contacted the two men’s lawyers and hoped they would present themselves in the United States.
Prosecutors said that they had agreed not to prosecute Iksil. The deal, however, requires him to cooperate fully with law enforcement.
Martin-Artajo oversaw JPMorgan’s trading strategy in London, and Grout, his subordinate, was in charge of recording the value of the investments each day. They were charged with conspiracy to falsify books and records, commit wire fraud and falsify Securities and Exchange Commission filings. They also were charged separately in an SEC civil complaint.
The charges focus on an investment portfolio whose components were supposed to be marked at their market value each day as best as the bankers could approximate. The charges say that from March to May 2012, under Martin-Artajo’s direction, Grout began using prices for the portfolio “deliberately chosen to minimize losses rather than represent fair value,” the SEC said.
Iksil, unhappy with Martin-Artajo’s orders, asked Grout to keep a spreadsheet to track the difference between the manipulated prices and the actual prices, according to U.S. Justice Department’s charges.
The “London Whale” accusations have been a heavy burden for JPMorgan, tarnishing its reputation as a risk manager and the favorite of Washington lawmakers. The bank, which is used to coming out ahead of its peers, has been forced to restate its earnings and face bruising hearings in front of Congress.
Nonetheless, even with the trading loss, JPMorgan last year recorded in its biggest annual profit and its stock is up by a third from its pre-”London Whale” price.
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Associated Press writer Greg Keller contributed to this report from Paris.
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London Whale
The bank’s chief investment office gambled on credit derivatives, a href=”http://www.huffingtonpost.com/2012/07/13/jpmorgan-chase-q02-earnings-2012_n_1670629.html” target=”_hplink”losing $5.8 billion/a (so far), and its trading desk may have tried to hide the losses from the home office. The bank says it is being sued by shareholders over the losses and has gotten subpoenas and requests for information from “Congress, the OCC, Federal Reserve, DOJ, SEC, CFTC, UK Financial Services Authority, the State of Massachusetts and other government agencies, including in Japan, Singapore and Germany.”
Milan Swap Deal
The bank has faced a href=”http://www.bloomberg.com/news/2012-07-18/milan-swaps-prosecutor-seeks-ban-on-4-banks-from-government-work.html” target=”_hplink”lawsuits and criminal investigations/a over an interest-rate swap deal it made with the city of Milan, Italy, back in 2005. The bank settled a civil suit, but criminal charges are still pending against the bank and several employees, with hearings in the trial “occurring on a weekly basis since May 2010.”
Enron
The bank and some of its executives are still being sued over the bank’s relationship with the failed, fraud-ridden energy giant, more than a decade after its failure.
Energy Manipulation
Speaking of Enron, the a href=”http://www.huffingtonpost.com/mark-gongloff/jpmorgan-chase-power-market_b_1647131.html” target=”_hplink”Federal Energy Regulatory Commission is investigating/a charges that JPMorgan manipulated power markets in California and the Midwest.
Credit Card Swipe Fees
The bank said in the filing that a href=”http://www.bloomberg.com/news/2012-08-09/jpmorgan-says-credit-card-swipe-case-cost-1-2-billion.html” target=”_hplink”it will pay about $1.2 billion/a to settle charges that it conspired with MasterCard and Visa to rig credit-card swipe fees.
Libor
The bank is being investigated by regulators all over the world for its a href=”http://www.huffingtonpost.com/2012/08/09/jpmorgan-chase-libor-subpoenas_n_1760015.html” target=”_hplink”alleged involvement in manipulating Libor/a, a short-term interest rate that affects borrowing costs for people, businesses and governments all over the world.
Madoff Ponzi Scheme
Several lawsuits have accused the bank of aiding and abetting Bernie Madoff’s Ponzi scheme, the biggest in history. The Madoff bankruptcy trustee and others have also sued the bank to get back some Madoff clients’ money.
MF Global
The bank is under investigation by regulators for its a href=”http://www.google.com/url?sa=trct=jq=esrc=ssource=webcd=1ved=0CFEQFjAAurl=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fhalahtouryalai%2F2012%2F06%2F04%2Fjpmorgans-other-messy-problem-mf-globals-missing-money%2Fei=Ui0lUNP7Eqe96QHP94CABAusg=AFQjCNEJVDksnFTh3KP1uS3u73bLgoSfZQ” target=”_hplink”relationship with the failed brokerage firm MF Global/a. It is also being sued for allegedly aiding and abetting MF Global misuse of customer money.
Mortgage Backed Securities
The bank is being sued by hordes of investors for its bundling and selling of mortgage-backed securities packed with bad mortgage debt before the financial crisis. “There are currently pending and tolled investor claims involving approximately $130 billion of such securities,” the bank says.
Mortgage Foreclosures
The bank was part of the big a href=”http://nationalmortgagesettlement.com/” target=”_hplink”$25 billion settlement/a with the government over mortgage-foreclosure abuses. But there are still several lawsuits and regulatory actions pending against the bank over its foreclosure practices.
Peregrine Financial
The bank didn’t mention this in its regulatory filing, but it is also involved in the failure of the Iowa brokerage firm Peregrine Financial. JPMorgan a href=”http://www.huffingtonpost.com/2012/07/12/pfg-customer-account-jpmorgan-chase_n_1668386.html” target=”_hplink”holds some customer money for the firm/a, and recently a href=”http://www.foxbusiness.com/news/2012/08/06/jp-morgan-objects-to-terms-proposed-by-peregrine-trustee/” target=”_hplink”tussled in court/a with the PFG bankruptcy trustee.
Javier Martin-Artajo, Ex-JPMorgan Trader, Arrested In Connection To "London ...
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