JPMorgan Chase & Co. sued the executive responsible for supervising Bruno Iksil, the trader nicknamed the London Whale for market-moving wagers at the division responsible for a $6.2 billion trading loss.
Javier Martin-Artajo, Iksil’s boss in the chief investment office, is a defendant in a London lawsuit filed Oct. 22 by the bank and made public today. The court filings didn’t reveal any details of the complaint. Both men have left the bank.
JPMorgan disclosed trading losses in May after what Chief Executive Officer Jamie Dimon said were “egregious” failures to manage flawed positions on synthetic credit securities. The bank is still recovering from those bets, the losses on which had risen to $6.2 billion through the first nine months of 2012 and may increase, the bank has said.
Martin-Artajo hasn’t been served with the lawsuit and hasn’t seen the bank’s evidence against him, according to his lawyer Greg Campbell. His client is “deeply disappointed by the bank’s unjustified assertion that he may have attempted to conceal the losses,” and is confident he’ll be cleared of any wrongdoing, Campbell said in an e-mail.
JPMorgan ousted managers responsible for the group’s loss and said it would claw back their pay after an internal probe found traders may have intentionally tried to hide the problem. The company didn’t name the managers. Iksil, Martin-Artajo and former Europe CIO head Achilles Macris were responsible for overseeing the trades.
Kate Haywood, a spokeswoman for the New York-based bank, declined to comment on the litigation by e-mail.
The internal investigation by JPMorgan found that Martin-Artajo encouraged Iksil to put higher values on his trades than they would have fetched on the open market, the Wall Street Journal reported in August.
JPMorgan is facing regulatory scrutiny and criminal probes over the CIO group’s trading as well as U.S. lawsuits from pension funds claiming they lost as much as $52 million because of its activities. The unit was pushed by Dimon to make bigger and riskier bets with the bank’s money in the years leading up to the losses, according to former employees.
The botched bets spawned management changes and dismissals, beginning with Chief Investment Officer Ina Drew, who retired four days after the loss was disclosed on May 10. Barry Zubrow, who had overseen JPMorgan’s risk management function during the period, will retire at the end of this year, he said Oct. 5.
The case is: JP Morgan Chase & Co v. Mr Javier Martin-Artajo, High Court of Justice, Queen’s Bench Division, HQ12X04391