SEC drops case against ex-JPMorgan traders over ‘London Whale’


Gerard Julien | AFP | Getty Images

Former JP Morgan trader Javier Martin-Artajo waves as he leaves the National Court in Madrid on November 15, 2013, after his extradition hearing.

The top U.S. securities regulator on Friday dropped its civil lawsuit accusing two former JPMorgan Chase traders of trying to hide some of the bank’s $6.2 billion of losses tied to the 2012 “London Whale” scandal.

The decision by the U.S. Securities and Exchange Commission to dismiss charges against Javier Martin-Artajo and Julien Grout came four weeks after the U.S. Department of Justice abandoned its criminal case against both men, who have denied wrongdoing.

Prosecutors said their case ran into trouble after testimony from Bruno Iksil, a cooperating witness who had been dubbed the London Whale, proved unreliable.

Iksil has publicly shifted blame for the losses toward upper JPMorgan management, including Chief Executive Officer Jamie Dimon, who at first called the matter a “tempest in a teapot.”

JPMorgan ultimately paid more than $1 billion and admitted wrongdoing to settle related U.S. and British probes.

No one was convicted or pleaded guilty over the losses, although Iksil had agreed to cooperate with prosecutors against Martin-Artajo, his supervisor, and Grout, who worked under him.

The men had worked for JPMorgan in London. Martin-Artajo is a Spanish national, while Iksil and Grout are French nationals.

“The government has done the right thing,” Bill Leone, a lawyer for Martin-Artajo, said in a phone interview. “The evidence in the case has been pretty overwhelming for some time that our client didn’t mislead anyone or do anything wrong.”

Edward Little, a lawyer for Grout, said in a phone interview: “At the end of the day, there was no evidence that justified these cases.”

The SEC dropped its case despite having a lower burden of proof than the Justice Department to show wrongdoing. It did not immediately respond to requests for comment.

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