US government authorities announced that they are going to arrest two former JPMorgan Chase workers who are suspected of hiding the size of a multibillion dollar trading loss. The case has dirtied the reputation of the nation’s largest bank and showed the dangers of Wall Street risk-taking.
The former employees of the bank worked in London. They could be arrested in the next couple of days. According to people who have knowledge about the issue, the two will be charged with criminal fraud. Javier Martin-Artajo was a manager who supervised the trading strategy. Julien Grout was a low level trader in London.
The two could be extradited under an agreement with British authorities. It was still unclear whether British authorities will be able to find the two, who came from other European countries. The United States attorney’s office in Manhattan and the F.B.I. declined to comment about the case.
The plan to arrest the two traders is an indicator of the new stance of the US government that was criticized for prosecuting only a couple of Wall Street workers with regards to the 2008 financial crisis. Going after employees of JPMorgan is a warning for the financial industry even if the two individuals fall below the executive ranks.
The losses involved in the JPMorgan case came from outsize wager made by the traders at the company’s chief investment office in London. The two utilized derivatives to bet on the health of large corporations such as American Airlines.
The trades resulted to large losses for the bank. JPMorgan disclosed the issue last May and has since announced that the losses totaled more than $6 billion. A year after collecting evidence about the losses, the F.B.I. and federal prosecutors came to the conclusion that the two workers understated the value of the trades to hide the problem from executives in New York.
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