NEW YORK — Two former JPMorgan Chase & Co. traders falsified bank records to try to cover up trading losses that were spiraling out of control, prosecutors said Wednesday in a criminal case that raises fresh questions about whether Wall Street learned its lessons from the 2008 financial crisis.
Javier Martin-Artajo, 49, and Julien Grout, 35, and their co-conspirators were accused of marking up the market value of an investment portfolio to hide the fact that it was plummeting in value. The portfolio eventually sank into an eye-popping $6 billion loss attributed to Bruno Iksil, a trader who became known as the “London Whale” for his location and the supersized bets he made.
Preet Bharara, the Manhattan U.S. attorney, hinted that the misconduct was not just the work of a couple of rogue traders, but was systemic in a bank that failed to keep adequate watch over its traders. He said companies need to pay closer attention to the cultures they create.
“This was not a ‘tempest in a teapot,' but rather a perfect storm of individual misconduct and inadequate internal controls,” Bharara said at a news conference — a jab at JPMorgan CEO Jamie Dimon, who once dismissed the controversy with that phrase.
The “London Whale” controversy has burdened the bank for months, but the new charges shift the narrative. Iksil, whose name has long been associated with the embarrassing loss, tried to raise questions about how his colleagues were recording the trades, according to prosecutors.
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