Newspaper article International Herald Tribune

Ex-Banker Arrested in 'London Whale' Case

Newspaper article International Herald Tribune

Ex-Banker Arrested in 'London Whale' Case

Article excerpt

Javier Martin-Artajo is accused of being among those who made foolhardy bets on credit derivatives, causing the bank's London unit to lose about $6 billion last year.

A former employee of JPMorgan Chase was arrested in Spain on Tuesday, weeks after the U.S. government charged him with hiding trading losses that ultimately reached more than $6 billion.

In a brief statement, the police said the former JPMorgan trader, Javier Martin-Artajo, a Spaniard, surrendered after they made contact with him. His case will now work its way through the National Court, whose duties include ruling on extradition requests.

Mr. Martin-Artajo, who worked in JPMorgan's London office, was released soon after his surrender. He agreed to remain at the disposal of the Spanish judiciary, but it was unclear whether his passport was confiscated to prevent him from leaving the country, according to a judicial source who asked not to be named.

The arrest in Spain underscores the logistical hurdles the case poses for the U.S. authorities, who recently charged Mr. Martin- Artajo and a lower-ranking employee who worked in the same office, Julien Grout of France.

The F.B.I and federal prosecutors in the U.S. Attorney's Office in New York initially planned to have the British authorities arrest Mr. Martin-Artajo in London and begin extradition proceedings. These U.S. officials, people briefed on the matter said, issued an arrest warrant. But without knowing his arrest had been planned, according to his lawyers, Mr. Martin-Artajo left London "on a long-planned vacation" to his native Spain.

Mr. Grout's whereabouts also present a challenge to the authorities. After struggling to find work after his departure from JPMorgan, Mr. Grout left London this year for France, which typically does not extradite its citizens. Mr. Grout's lawyer, Edward Little, said his client had also spent a brief period in the United States, where his wife's family lives.

"I'm in discussions with the U.S. Attorney's Office about how to proceed, but no decision has been made," Mr. Little said on Tuesday after Mr. Martin-Artajo's arrest was announced. Mr. Grout, he said, "has absolutely no intention of fleeing."

The criminal charges stem from a risky bet at JPMorgan's chief investment office in London, where Mr. Grout and Mr. Martin-Artajo worked. The bet involved credit derivatives, which allow traders to bet on the perceived health of companies.

When the bet soured in the spring of 2012, prosecutors claim, the traders deliberately overstated the value of their positions to hide hundreds of millions of dollars in losses. The two employees were charged with wire fraud, falsifying bank records and contributing to false regulatory filings. Prosecutors also charged them with conspiracy to commit those crimes. …

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