London Whale

  • 02 Apr 2014 at 5:19 PM

JP Morgan Fugutive Open To Dropping Fugitive Status

A lawyer for a former JPMorgan Chase & Co trader accused of helping to hide trading losses tied to a $6.2 billion financial scandal said on Wednesday his client was open to leaving France to voluntarily face U.S. criminal charges. Julien Grout, the former trader, is accused of participating in a conspiracy to hide losses within JPMorgan’s Chief Investment Office in London by marking positions in a credit derivatives portfolio at inflated prices. He and another one-time trader at the bank, Javier Martin-Artajo, are considered fugitives by the U.S. government for not coming to the United States to face trial over charges stemming from the so-called London Whale scandal. But at a hearing in federal court in New York, Marc Weinstein, a lawyer for Grout, told U.S. District Judge George Daniels that talks were under way with prosecutors about a bail package that would enable Grout, a French citizen, to come to the United States. [Reuters]

Q: You couldn’t have not known what was happening. The central figure, the former deputy chief of staff Bridget Kelly, was one of your own most senior aides. A: …The fact that every day, 65,000 people have letterhead with my name on it and I don’t know what they’re doing all day. Now I understand that people say well, this isn’t one of the 65,000 — this is someone in your office. You know, the fact is, as I said at the press conference, Matt, if someone doesn’t tell you the truth, there is often very little you can do in reaction to that. So, no, anyone who would say that has no appreciation for what it’s like to be governor or, frankly, chief executive of any kind of major organization. That’s like saying any of these folks who’ve been in trouble in the banking industry, like the JPMorgan Chase thing – how could Jamie Dimon not have known about a trade that was being put on by a trader in London? Well, you know, I think it’s fairly safe to say that Jamie Dimon didn’t know that a trade was being put on, and that when people lied about it, he didn’t know they were lying. So it happens. [Matt Bai via BI]

Just kidding. Once he’s out of JPM he’s joining a Shuffleboard league at Del Boca Vista. Read more »

  • 16 Sep 2013 at 5:08 PM

JP Morgan Not Done Pay For Whale Losses Just Yet

JP Morgan is near a final settlement of probes into its London Whale derivatives loss and expects to pay about $700 million, according to source familiar with the matter. Completion of the deal depends on coordinating agreements with multiple government agencies, the source said. [Reuters]

As you may have heard, earlier this week two JP Morgan employees, Javier Martin-Artajo and Julien Grout, were charged by federal prosecutors with conspiracy, wire fraud, and false filings, for “engaging in a scheme to falsify securities filings between march and May of 2012.” Both men were based in JP Morgan’s London office (as was the guy whose PnL they were allegedly falsifying, AKA the London Whale). Presently, both remain overseas, though Manhattan U.S. Attorney Preet Bahara has urged them to “do the right thing” and surrender stateside. According to Grout’s lawyers, that’s not going to happen any time soon because 1) he is busy looking for a job and 2) he doesn’t consider himself a fugitive (and France has “no obligation under its extradition treaty with the U.S. to send him to New York). As for Martin-Artajo? As far as he knows, he’s yet to be given a valid reason why there’s anywhere he needs to be besides a beach sipping drinks with tiny umbrellas in them. Read more »

Hundreds of miles from the bustling trading rooms where he worked with the “London Whale”, a former JPMorgan trader has taken refuge in a French hamlet where few have heard of the $6.2 billion scandal to which he is being linked. U.S. authorities on Wednesday filed charges against Julien Grout for crimes related to the scandal, including wire fraud, conspiracy and the falsifying of books and records. But in sun-drenched Sarrazac, a village of two dozen stone houses built around a medieval church in southern France, the affair had barely registered before this week….”He has just arrived, he seems to be a very nice guy,” said Sarrazac mayor Habib Fenni, who met Grout a day earlier and was not aware of JPMorgan’s troubles or the role the French village’s new resident is alleged to have played in them. Village restaurant owner Chantal Guerby, meanwhile, described Grout as “a nice guy who keeps himself to himself”. [Reuters]

Today U.S. prosecutors charged former JPMorgan CIO traders Javier Martin-Artajo and Julien Grout with various crimes for mis-marking the London Whale structured credit portfolio positions. The complaints are here and here and reading them you get the strong sense that Bruno Iksil, the Whale himself, was the hero of the whole saga. Oh, sure, he built a colossal portfolio of what turned out to be massively money-losing speculative trades, and yes, he did sit by and watch as his boss Martin-Artajo and his underling Grout conspired to mis-mark that portfolio to disguise hundreds of millions of dollars of losses, but: it made him angry.1 So that’s something? Anyway, he is not being charged and is cooperating with authorities, and I guess one benefit of cooperating, in addition to the not prison, is that you come across pretty well in the complaints.

Meanwhile Martin-Artajo and Grout were not pure of heart, per the complaints; they conspired to mis-mark the book to, in Martin-Artajo’s case, make sure that their bosses didn’t take it away from him,2 and in Grout’s case, I dunno, to do what Martin-Artajo told him to do I guess. The dynamics of this terrible terrible team are a bit unclear. From the emails and recorded calls Martin-Artajo seems like the sort of guy you would not want to work with if you were law-abiding and massively money-losing; he spent a lot of time yelling at Iksil for his conscience.3 Read more »