Toronto Star

TRADERS ON TRIAL

Two Jpmorgan bankers face criminal charges in the $6.2 billion “London Whale” trading scandal,

-

NEW YORK— Two former JPMorgan Chase & Co. traders falsified bank records to try to cover up trading losses that were spiraling out of control, prosecutor­s said Wednesday in acriminal case that raises fresh questions about whether Wall Street learned its lessons from the 2008 financial crisis.

Javier Martin-Artajo, 49, and Julien Grout, 35, and their co-conspirato­rs were accused of marking up the market value of an investment portfolio to hide the fact that it was plummeting in value. The portfolio eventually sank into an eye-popping $6 billion loss attributed to Bruno Iksil, a trader who became known as the “London Whale” for his location and the supersized bets he made. Preet Bharara, the Manhattan U.S. attorney, hinted that the misconduct was not just the work of a couple of rogue traders, but was systemic in a bank that failed to keep adequate watch over its traders. He said companies need to pay closer attention to the cultures they create. “This was not a ‘tempest in a teapot,’ but rather a perfect storm of individual misconduct and inadequate internal controls,” Bharara said at a news conference — a jab at JPMorgan CEO Jamie Dimon, who once dismissed the controvers­y around the trading loss with that flip phrase. The “London Whale” controvers­y has burdened the bank for months, but the new charges shift the narrative of the tale. Iksil, whose name has long been associated with the embarrassi­ng loss, tried to raise questions about how his colleagues were recording the trades, according to prosecutor­s.

Prosecutor­s also portray bank employees as knowing exactly what they were doing, not workers simply overwhelme­d by complicate­d systems — a defence banks have mounted for missteps in the financial crisis and its aftermath.

Lawyers for Grout and Martin-Artajo, both based in London when they worked at JPMorgan, did not return calls for comment.

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.

Newspapers in English

Newspapers from Canada