The “London Whale” scandal, wherein traders at the London branch of JPMorgan Chase & Co. (JPM) attempted to obfuscate trading losses that eventually totaled $6.2 billion, has dogged the investment bank since the scandal was first revealed in May 2012. Though JPMorgan has put many aspects of the loss behind them, including making up the massive revenue writedown with a string of highly profitable quarters, the investment bank is still in hot water with the government.
On Aug. 14 the US Department of Justice officially indicted two of the traders responsible, and demanded they come to the US to face charges. On Aug. 27, one of the traders, Javier Martin-Artajo turned himself into authorities in Madrid. He has since been released, however, as he opposes facing criminal sanctions Stateside.
Another trader, the “London Whale” himself, Bruno Iksil, signed a non-prosecution agreement with the U.S. in June to avoid doing jail time. The second trader, Julien Grout, is living in France and has not been extradited either.
Bringing Artajo to justice is a major priority for the US government. Federal authorities are still looking to hand down their first criminal charges associated with the London Whale affair. Public sentiment against the company has intensified, and Artajo seems the best candidate to take the fall. Artajo is accused of masterminding several aspects of the scandal, including the initial decision to misrepresent losses in their credit portfolio.
The US government has been pushing aggressively this summer to punish JPMorgan for various crimes tied to London Whale, and beyond. The SEC has demanded the bank officially admit to culpability in the Lodnon Whale, which could spur shareholder lawsuits. On July 30, the bank was forced to pay out a $410 million settlement in a energy price-fixing scandal. The onslaught of sanctions and criminal charges has led some analysts to speculate that the government is even trying to break up the company.
JPMorgan is down 1.54 percent to hit $51 a share.