U.S. prosecutors have decided to drop criminal charges against two former JPMorgan Chase & Co derivatives traders implicated in the “London Whale” trading scandal that caused $6.2 billion (5 billion pounds) of losses in 2012.
In seeking the dismissal of charges against Javier Martin-Artajo and Julien Grout, the Department of Justice said it “no longer believes that it can rely on the testimony” of Bruno Iksil, a cooperating witness who had been dubbed the London Whale, based on recent statements he made that hurt the case.
Prosecutors also said efforts to extradite Martin-Artajo and Grout, respectively citizens of Spain and France, to face the charges have been “unsuccessful or deemed futile.”
Bruno Iksil, the former JPMorgan Chase & Co (JPM.N) trader at the center of the “London Whale” trading scandal, has accused the Wall Street bank’s Chief Executive James Dimon of laying the ground for the $6.2 billion loss.
In an account on his website, Iksil, a French national who traded credit derivatives for JPMorgan in London, also blamed senior executives at the bank. (bit.ly/2sjf2WS):
- What is the purpose of this website?
The “London Whale” case is a huge trading scandal that occurred at the CIO of the US bank Jp Morgan in second quarter of 2012. It is not pictured correctly by any public report so far. There are topics that investors, employees, and the public in general should be aware of :
- The bank Jp Morgan had long ordered the controversial trades that would cause the scandal in 2012. Whatever the loss that burdened its CIO unit, irrespective of the “element of surprise” that the bank may allege, the firm as a whole made much, much more money through the event. The senior executives knew their actions were border line though since 2010 at the latest. Some events in 2009 and early 2010 are important clues to that: the VAR reports changed in September 2009, Bill Winters was fired abruptly next, a “cushion/reserve” of $300 million was ignored by CFO in December 2009, the book had to be “killed” on the follow in January 2010, Dimon and Cavanagh came to visit CIO London but not Iksil in early March 2010, new liquidity reserve rules were enacted in late March 2010 but were next not enforced, Cavanagh the then CFO suddenly changed cap in June 2010, the CFO of CIO left 4 months later for undisclosed reasons in November 2010, right when Iksil got a “chocolate medal” promotion. Regulators sent warning letters precisely then….
- The senior executives chose indeed “Iksil” to work as a “screen” for them in late 2010. It was a complete setup manufactured around RWA projective but pointless modeled reductions and misleading risk reports about stress test limits breaches. The executives promoted “Iksil” without changing his role and responsibilities. They gave him quite specific paradoxical orders despite his alerts all along 2011 and 2012. They finally left his name being relentlessly placated through the media starting on April 6th 2012 as things were just getting worse and worse for them.
- Some authorities have not performed their duty, far from it as the public reports show for those who know the case in depth. The “screen guy” complains against the UK regulator today, namely the FCA with good reasons. It may not stop at the FCA…
- At the end of the day about $50 bln changed hands in the second quarter 2012 between a mass of investors and some “happy insiders”. Jp Morgan made about $25 billion or more on the event for itself as its public accounting reports show through the generation of what is called “tangible capital” or “hard capital” (10-Q and 10-K reports filed with the SEC).
- One may summarize the trading scandal as: when the CIO of JP Morgan had lost $1 billion dollar, Jp Morgan as a whole had made $4 billion for itself net of its CIO loss. The Jp Morgan CIO lost in whole $6.3 billion which led to an ultimate profit at Jp Morgan of more than $25 billion in 2012.
Yes, Hillary should ask Jamie “tempest in the teapot” Dimon that question.
Yesterday, building on the momentum afforded her by a series of articles in the New York Times, Hillary Clinton asked the audience at a campaign stop in Toledo, Ohio: “What kind of genius loses a billion dollars in one year.” Clinton was referring to the New York Times revelation on Sunday that Donald Trump’s 1995 tax return showed a loss of $916 million. (See video clip below.)
If Hillary really wants to know what kind of genius can lose a billion dollars in one year or $6.2 billion in the case of traders at JPMorgan Chase, she should ask the bank’s CEO Jamie Dimon. The $6.2 billion London Whale loss at JPMorgan Chase is far more scintillating a feat since it involved wild derivative gambles in London in 2012 using the taxpayer-backstopped, insured savings deposits at the largest bank in the U.S. The U.S. Senate’s Permanent Subcommittee on Investigations conducted an in-depth investigation and report of the matter. The Chairman of the Subcommittee at the time, Senator Carl Levin, stated that JPMorgan “piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight, and misinformed the public.”
Bank agreed to pay $150 million to end London Whale suit
Pension funds said high-risk trades hidden from investors
JPMorgan Chase & Co. won a judge’s approval to pay $150 million to settle investor claims that it hid as much as $6.2 million in losses caused by a trade dubbed the London Whale.
U.S. District Judge George Daniels in New York on Tuesday accepted the accord, which ended a suit brought by a group of pension funds in 2012. They accused JPMorgan of turning its London-based Chief Investment Office in London into a “secret hedge fund” that caused the losses.
The accord in the class-action suit “is adequate and reasonable,” the judge said.
The bank told investors that the office’s primary role was managing risk, but the lawsuit alleged it was instead engaging in risky trades to generate profits.
Ohio pension funds and other plaintiffs claimed they incurred tens of millions of dollars of losses because their fund managers were given false and misleading information. Bruno Iksil, who became known as the London Whale because he amassed large, market-moving positions in credit derivatives, made the trades for the bank.
The trader at the center of the “London Whale” trading debacle broke nearly four years of silence by taking aim at former employer J.P. Morgan Chase & Co., saying he was made a scapegoat for trades that were “initiated, approved, mandated and monitored” by senior management.
Bruno Iksil also said that he resents the London Whale nickname, which was devised by rival traders to dramatize the size of J.P. Morgan’s bets in corporate-debt markets.
In a single-spaced letter exceeding three pages and sent to publications including Financial News, Mr. Iksil contends the bank and the news media misrepresented his role in the 2012 episode, which led to more than $6 billion in losses for the nation’s largest bank and a handful of personnel changes.
“For no good reason, I was singled out by the media,” Mr. Iksil writes.
A British regulator said on Tuesday that it had fined a former JPMorgan Chase executive for failing to be “open and cooperative” about concerns regarding trading that eventually cost the bank more than $6 billion in losses in 2012, an episode known as the London whale.
The regulator, the Financial Conduct Authority, said that Achilles Macris, a former executive in charge of JPMorgan’s international chief investment office in London, had been fined 792,900 pounds, or about $1.1 million, for failing to report concerns regarding the bank’s synthetic credit portfolio in March 2012 and in April 2012.
The chief investment office was created to invest JPMorgan’s own money and to help offset potential losses in the bank’s other businesses.
Law360, New York (January 22, 2016, 1:16 PM ET) — JPMorgan Chase & Co. employees claiming their retirement plan tanked after the $6 billion “London Whale” fiasco told a New York federal court on Thursday that they intend to appeal the potential class action’s dismissal to the Second Circuit.
U.S. District Judge George B. Daniels on Jan. 8 dismissed the case, finding that JPMorgan’s actions taken as a sponsor of the plan didn’t amount to fiduciary functions that triggered liability under the Employee Retirement Income Security Act.
The current and former employees bringing the suit said…