U.S. Drops Case Against 'London Whale' Traders -- Update
July 21 2017 - 08:06PM
Dow Jones News
By Rebecca Davis O'Brien
Federal prosecutors said they will drop charges against two
former J.P. Morgan Chase & Co. traders at the center of the
2012 "London Whale" saga, ending the last U.S. criminal case
against traders involved in a debacle that cost the New York bank
more than $6 billion.
In filing to dismiss charges that it brought four years ago, the
Manhattan U.S. Attorney's office on Friday cited a collapse in the
credibility of a lead witness, Bruno Iksil, the former J.P. Morgan
trader who came to be known as the London whale for his outsize
trading positions. A lawyer for Mr. Iksil couldn't immediately be
reached for comment Friday evening.
A spokesman for J.P. Morgan declined to comment.
Charges are to be dismissed against Javier Martin-Artajo and
Julien Grout, who faced charges including conspiracy, wire fraud
and securities fraud for their alleged role in a conspiracy to
conceal losses sustained through a series of disastrous derivatives
trades.
Law-enforcement officials brought charges in 2013 after probing
whether traders in J.P. Morgan's chief investment office knowingly
misvalued their positions to hide or understate losses as they
piled up, according to people familiar with the investigations.
The two men, who no longer work at the bank, still face civil
charges brought by the Securities and Exchange Commission.
A lawyer for Mr. Martin-Artajo declined to comment, citing the
pending case with the SEC. Ed Little, a lawyer for Mr. Grout, said
he and his client "are thrilled that after four long years of tough
litigation, the government has finally decided to dismiss the case,
and we thank them for their decency and professionalism."
U.S. prosecutors were among several regulatory and
law-enforcement agencies trying to determine responsibility for the
trading losses, which took place in a London outpost of the bank's
chief investment office.
In 2013, J.P. Morgan agreed to pay at least $800 million in
fines to settle claims by U.K. and U.S. regulators stemming from
the bank's role in the trades.
Neither Mr. Martin-Artajo nor Mr. Grout ever appeared in a U.S.
court to face the federal criminal charges. In April 2015, a
Spanish court rejected prosecutors' request to extradite Mr.
Martin-Artajo, who is a Spanish citizen. On Friday, the Manhattan
U.S. Attorney's office said efforts to extradite Mr. Grout, a
French citizen, from France "would have been futile."
The office said recent comments by Mr. Iksil led it to conclude
it "no longer believes that it can rely on the testimony of Iksil
in prosecuting this case, even if the defendants appeared."
Mr. Iksil -- who earned the nickname in the market for his
outsize derivative positions before the losses came to light --
signed a nonprosecution agreement with the Justice Department in
2013 and agreed to give evidence against his two former colleagues.
He had also been helping the SEC investigation.
In recent months, Mr. Iksil has spoken publicly about the case
in the press, telling Financial News that he was writing a book and
planned to launch a website to tell "the full story" of the trading
scandal.
Earlier this year, the Federal Reserve chose not to go forward
with legal action against Mr. Iksil for his role. He told The Wall
Street Journal that the Fed's decision not to pursue the
investigation made him "more determined than ever" to go public
with his version of events.
(END) Dow Jones Newswires
July 21, 2017 19:51 ET (23:51 GMT)
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