Exclusive: A fourth trader under scrutiny in JPM "Whale" probe

Wed Sep 5, 2012 4:07pm EDT
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By Emily Flitter

NEW YORK (Reuters) - A fourth London-based JPMorgan Chase trader is under scrutiny in the investigation by U.S. authorities into the bank's nearly $6 billion trading loss, according to sources familiar with the situation.

Julien Grout, a trader who joined JPMorgan Chase in 2009, is drawing attention because he worked in the bank's Chief Investment Office and reported to Bruno Iksil, the French credit trader who is a central figure in the federal probe, said the two sources.

U.S. authorities are trying to determine whether traders in the bank's London office, including Iksil, took steps to try and hide some of the losses the bank was incurring on a series of complex derivatives trades. In the trading community in London, Iksil became known as the London Whale because of the large positions he and his colleagues were taking on.

Grout is still working for JPMorgan, according to a bank spokeswoman. He has declined to comment, she said.

He has retained a lawyer in connection with the investigation, the sources said.

Grout, who is also French, is at least the seventh current or former JPMorgan employee to retain outside counsel in connection with the probe.

The JPMorgan spokeswoman declined to comment further on the matter. The spokeswoman agreed to pass on a request for comment to Grout's lawyer but the lawyer did not respond to the request.

Grout worked for Iksil during the time the bank's Chief Investment Office was taking on increasingly large positions in an illiquid credit market, including an index that tracks derivatives tied to corporate defaults.   Continued...

The lobby of JP Morgan headquarters is photographed through a window in New York May 22, 2012. REUTERS/Eduardo Munoz