Ex-JPMorgan traders, citing arrest risk, avoid SEC deposition in N.Y

Wed Oct 21, 2015 12:18pm EDT
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By Nate Raymond

NEW YORK (Reuters) - Two former JPMorgan Chase & Co (JPM.N: Quote) traders living abroad who face U.S. charges over the bank's $6.2 billion "London Whale" scandal won a bid on Wednesday to avoid sitting for a deposition in New York, where their lawyers say their arrest is likely.

The decision by U.S. District Judge George Daniels in Manhattan marked another setback for U.S. authorities, who have been unable to secure the extradition of the traders, Javier Martin-Artajo and Julien Grout.

The ruling came in a lawsuit by the U.S. Securities and Exchange Commission that was filed at the same time that federal prosecutors announced criminal charges against the traders in April 2013.

Martin-Artajo and Grout face criminal charges including securities and wire fraud for hiding losses within JPMorgan's chief investment office in London by marking positions in a credit derivatives portfolio at inflated prices.

Those losses were part of an overall $6.2 billion trading loss suffered by the bank centered on Bruno Iksil, an ex-trader known as the "London Whale." Martin-Artajo supervised Iksil, while Grout worked for Iksil.

In 2013, JPMorgan agreed to pay more than $1 billion to settle U.S. and British probes into the losses.

U.S. authorities call both men fugitives. Martin-Artajo lives in Spain, where a court in April rejected his extradition to the United States, while Grout lives in France, which does not extradite its own citizens.

Soon after the Spanish decision, the SEC, whose civil case continued on, said it wanted to depose both men in New York.   Continued...

Former JPMorgan employee Javier Martin-Artajo, indicted by a U.S. grand jury in relation to the bank's "London Whale" trading scandal, leaves Spain's High Court in Madrid March 5, 2015. REUTERS/Susana Vera