JPMorgan Sues London Whale’s Boss

Losses from Iksil’s trades totaled $6.2 billion, could rise

JPMorgan's headquarters in New York. (Photo: AP) JPMorgan's headquarters in New York. (Photo: AP)

More On Legal & Compliance

from The Advisor's Professional Library
  • Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firm’s policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
  • How to Avoid Sabotaging Your Compliance Exam There is much more to compliance examination survival than knowing all of the rules. It helps to understand why the rules were put in place—and to recognize that examiners are not the enemy.

JPMorgan Chase & Co. has filed suit against Javier Martin-Artajo, the executive who supervised Bruno Iksil, aka the London Whale, after the latter’s disastrous trades lost the bank what could be upwards of $6.2 billion.

Bloomberg reported Wednesday that the bank had filed the action in London on Oct. 22 and made it public on Wednesday. The filings revealed no details of the suit; neither Martin-Artajo nor Iksil are still with the bank.

According to an August Wall Street Journal report, JPMorgan’s internal investigation into the losses indicated that Martin-Artajo encouraged Iksil to value his trades higher than they would have sold for on the open market.

After the bank’s investigation found an apparent effort by traders to hide the problem, JPMorgan fired the managers responsible and added that it would claw back pay. Although the company didn’t name the managers, responsibility for the trades fell to managers Iksil, Martin-Artajo and former Europe Chief Investment Office head Achilles Macris.

Greg Campbell, Martin-Artajo’s lawyer, said his client has neither been served with the suit nor seen the bank’s evidence against him. Campbell said his client was “deeply disappointed by the bank’s unjustified assertion that he may have attempted to conceal the losses” and was confident he would be cleared of any wrongdoing.

The trades cost the bank a number of its high-level executives; departures include Ina Drew, who was chief investment officer of the London office and retired four days after the loss was made public, and Barry Zubrow, who said earlier this month that he would retire at the end of the year. Zubrow was in charge of the bank’s risk management function at the time of the trades.

Former employees have said that the unit was pushed to make riskier bets in larger amounts by CEO Jamie Dimon in the years preceding Iksil’s spectacular losses. Investigations by regulators are ongoing, as are criminal probes and lawsuits from pension funds that suffered losses they say are as high as $52 million.

Reprints Discuss this story
This is where the comments go.