Federal prosecutors in the U.S. have charged two former traders in JPMorgan Chase's London office with securities fraud. The two men were part of the so-called "London Whale" case, which ended up costing the company more than $6 billion. U.S. officials say the men lied about the value of some derivatives trades to cover up mounting losses.
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DAVID GREENE, HOST:
NPR's business news starts with more legal trouble for JPMorgan.
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GREENE: In New York, prosecutors have unsealed charges against two men they say are responsible for concealing a $6 billion trading loss at the nation's biggest financial institution, JPMorgan Chase and Co. The man who made those trades was dubbed the London Whale. But as Ilya Marritz of member station WNYC reports, he's not the one who's being charged.
ILYA MARRITZ, BYLINE: Instead, the defendants are Javier Martin-Artajo, a Spaniard, and Julien Grout, a Frenchman. Both men worked mainly in JPMorgan's London office, in a unit that traded complex derivatives. Preet Bharara, the U.S. attorney in New York, says this was a very lucrative business.
PREET BHARARA: Generating approximately $2 billion in gross revenue. It was profitable until 2012, when things began to go south in a pretty big way.
MARRITZ: The losses mounted quickly. And instead of truthfully reporting these losses each day to regulators, as required under U.S. law, Bharara says the defendants cooked the books, hoping things would improve. They didn't. JPMorgan Chase ultimately lost $6 billion. And CEO Jamie Dimon was hauled before Congress to explain why his bank had been engaged in risky trades just a few years after the financial crisis.
JAMIE DIMON: This portfolio morphed into something that rather than protect the firm, created new and potentially larger risks. As a result, we've let a lot of people down, and we are sorry for it.
MARRITZ: Neither Dimon nor JPMorgan was named in the indictments. As for the men charged, they're outside of the U.S. and haven't been arrested. Martin-Artajo's attorney says he will be cleared. Bharara says the lessons of this case are disturbing.
BHARARA: We happen to live in a time where not just one bank but one trader within one bank can do catastrophic economic harm in practically the blink of an eye.
MARRITZ: So what about the man who made those trades? The so-called London Whale - his name is Bruno Iksil - is safe. In exchange for his cooperation, Iksil has immunity from prosecution. The authorities say there's evidence he disagreed with his bosses' risky trading strategy.
For NPR News, I'm Ilya Marritz in New York. Transcript provided by NPR, Copyright NPR.