A former JPMorgan banker charged with concealing massive losses related to the bank’s ‘London Whale’ trade has been arrested in Spain.
Spanish police said Javier Martin-Artajo, former head of credit and equity trading at JPMorgan’s chief investment office, turned himself in. His case has been handed over to the National Court, which deals with serious international crimes.
U.S. prosecutors charged Artajo and his colleague Julien Grout earlier this month with conspiring to conceal more than $500 million in losses related to the bank’s complex derivatives bet that turned sour. The series of trades ultimately generated losses of more than $6 billion for JPMorgan.
Bruno Iksil, another trader on the team, escaped prosecution after agreeing to provide U.S. authorities with evidence about the trades, and to testify at any trial.
The criminal charges were the first to be filed in connection with the losses. They include wire fraud, falsifying books, records and Securities and Exchange Commission filings, and conspiracy.
When losses began to mount in March 2012, Martin-Artajo allegedly instructed Grout to hide how deep they were from JPMorgan management, ultimately resulting in the bank overstating first-quarter earnings by several hundred million dollars, prosecutors say.
In a statement issued earlier this month via law firm Norton Rose Fulbright, Martin-Artajo said he was confident he would be cleared of any wrongdoing.
JP Morgan declined to comment.
The losses from the London trades, which drew on federally insured deposits, stoked new concerns about the stability of big banks.
A report on the botched trade issued in March by a Senate committee said JPMorgan had “disregarded multiple internal indicators of increasing risk; manipulated models; dodged [federal] oversight; and misinformed investors, regulators, and the public about the nature of its risky derivatives trading.”
Regulators at the Federal Reserve and the Office of the Comptroller of the Currency ordered JPMorgan in January to improve its risk management and internal auditing in light of the losses. The bank did not face any monetary penalty at that time, consenting to the order without admitting or denying wrongdoing.
— CNN’s Al Goodman contributed to this article.
