Authorities plan to arrest two former JPMorgan Chase & Co. employees on fraud charges related to their role in a trading loss last year, the New York Times reported, citing people briefed on the matter.
Javier Martin-Artajo and Julien Grout, who worked in the bank’s London office, will probably be taken into custody in coming days, the newspaper reported. They are natives of other European countries and British authorities may not be able to locate them, according to the report.
An attorney for Martin-Artajo didn’t immediately reply to requests for comment from Bloomberg News. An attorney for Grout and spokesmen for the Federal Bureau of Investigation and U.S. Attorney’s Office declined to comment.
Prosecutors determined that Martin-Artajo and Grout, who worked in a London unit that lost more than $6 billion last year, concealed losses from their managers in New York, the newspaper said. The case hinges on help from Bruno Iksil, who was dubbed the London Whale because of his trading positions’ outsized effects on credit-derivative markets, according to the New York Times.
Iksil, who some investigators decided had been unfairly blamed for the losses, met with authorities in Brussels and New York and secured a cooperation agreement with the U.S. government, the newspaper reported. It isn’t clear whether he could face charges, according to the paper.
An attorney for Iksil declined to comment to Bloomberg News, as did Joseph Evangelisti, a spokesman for JPMorgan in New York.
JPMorgan, the biggest U.S. bank by assets, is also negotiating the final terms of a deal with the Securities and Exchange Commission to end a yearlong probe of the trading loss, two people briefed on the talks said on Aug. 8.
The bank, led by Chief Executive Officer Jamie Dimon, is seeking to resolve U.S. and U.K. probes after botched trades by its chief investment office led to the losses and an earnings restatement. Senate investigators concluded in March that the bank dodged regulators and misled investors about the souring bets.
JPMorgan’s own 129-page report on the losses, released in January, found that London traders initially tried to hide losses on the positions. The employees left the bank and the bank sought to claw back pay. The report also blamed managers, some of whom were reassigned or left the bank, for failing to halt the losses.
Martin-Artajo, who supervised Iksil, in January settled a London lawsuit brought against him by the bank, a person with direct knowledge said at the time. The bank sued Martin-Artajo in October without detailing its allegations in filings.