U.S. Drops Case Against 'London Whale' Traders

By Rebecca Davis O'Brien 

Federal prosecutors said they will drop charges against two former J.P. Morgan Chase & Co. traders at the center of the 2012 "London Whale" saga, ending the last U.S. criminal case against traders involved in a debacle that cost the New York bank more than $6 billion.

In filing to dismiss charges that it brought four years ago, the Manhattan U.S. Attorney's office on Friday cited a collapse in the credibility of a lead witness, Bruno Iksil, the former J.P. Morgan trader who came to be known as the London whale for his outsize trading positions. A lawyer for Mr. Iksil couldn't immediately be reached for comment Friday evening.

A spokesman for J.P. Morgan declined to comment.

Charges are to be dismissed against Javier Martin-Artajo and Julien Grout, who faced charges including conspiracy, wire fraud and securities fraud for their alleged role in a conspiracy to conceal losses sustained through a series of disastrous derivatives trades.

Law-enforcement officials brought charges in 2013 after probing whether traders in J.P. Morgan's chief investment office knowingly misvalued their positions to hide or understate losses as they piled up, according to people familiar with the investigations.

The two men, who no longer work at the bank, still face civil charges brought by the Securities and Exchange Commission.

A lawyer for Mr. Martin-Artajo declined to comment, citing the pending case with the SEC. Ed Little, a lawyer for Mr. Grout, said he and his client "are thrilled that after four long years of tough litigation, the government has finally decided to dismiss the case, and we thank them for their decency and professionalism."

U.S. prosecutors were among several regulatory and law-enforcement agencies trying to determine responsibility for the trading losses, which took place in a London outpost of the bank's chief investment office.

In 2013, J.P. Morgan agreed to pay at least $800 million in fines to settle claims by U.K. and U.S. regulators stemming from the bank's role in the trades.

(END) Dow Jones Newswires

July 21, 2017 19:33 ET (23:33 GMT)

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