A former trader at JP Morgan Chase, Spaniard Javier Martin-Artajo, was arrested Tuesday in Madrid, almost two weeks after U.S. prosecutors accused him of trying to hide losses from transactions that cost the bank more than $6.2 billion, in the so-called “London Whale” scandal.
Martin-Artajo surrendered himself to the police this morning, after being contacted by investigators, and his passport was confiscated during the extradition proceedings, said a Spanish police official.
“The arrested person is presumed responsible for manipulating and inflating the value of positions in the synthetic credit portfolio of his firm with the aim of achieving specific objectives of daily losses and gains,” reads a statement from the Spanish police.
U.S. prosecutors have indicted this month Martin-Artajo, a Spanish national, and Julien Grout, a French citizen, for trying to conceal losses produced by Bruno Iskil trades. Both risk jail sentences of up to 20 years if convicted of the most serious charges, including conspiracy and wire fraud.
Martin-Artajo, aged 49 years, was supervising trading strategy for Bruno Iskil’s portfolio at chief investment office of JP Morgan in London and Grout was the trader who worked for him. They are both accused of conspiring to falsify statements filed with regulators in March-May of 2012.
Jamie Dimon, chief executive officer, chairman and president of JP Morgan, characterized bank’s losses as the most stupid and embarrassing situation ever.
The discovery of the losses, in May 2012, led to the republishing of the financial results of JP Morgan, a hearing of a U.S. Senate committee, an investigation of the U.S. Securities and Exchange Commission (SEC) and the Financial Sector Regulatory Authority in the UK .
Bruno Iksil, the French trader at the center of this scandal, nicknamed the “London Whale” because of the size portfolio that he managed, has reached in June a deal with U.S. authorities and will not be indicted as he has committed to cooperate with investigators.
Javier Martin-Artajo was later today released from police custody after he told the court in Madrid that he opposes extradition to the U.S.
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