Ex-JPMorgan Traders Get Criminal Charges Over the Allegedly Fraudulently Inflating Investments’ Value to Hide Massive Trading Losses

Earlier this month our securities law firm reported that the US Department of Justice was planning to bring criminal charges against Julien Grout and Javier Martin-Artajo, two ex-JPMorgan Chase & Co. (JPM) trading specialties. The charges, including conspiracy, wire fraud, falsification of books and records, and falsification of SEC records, now have been filed. The government contends that they conspired to conceal huge trading losses and made false statements to regulators.

According to U.S. Attorney Preet Bharara, the men purposely lied about the “fair value of billions of dollars in assets” on the firm’s books to conceal massive losses that continued to grow each month. He says that the trading losses would eventually total over $6 billion and involved credit default swaps and other synthetic derivative products.

The portfolio had tripled in worth to about $157 billion in net national positions between 2011 and 2012, and JPMorgan made about $2 billion in profits from 2006 through 2012. But when traders began to take large derivative positions, there were big financial losses and the portfolio began to lose money—over $185 million between January and February of 2012 alone.

The defendants are accused of inflating and manipulating the position marks’ value in the portfolio to reach profit and loss objectives. They allegedly sought to conceal the actual extent of the losses. Meantime, the SEC is also naming Martin-Artajo and Grout in a securities lawsuit over related alleged misconduct.

E-mails, texts, phone call records, chat transcripts, accounting records, and other documents were used in the investigation. While JPMorgan is not a defendant in either case, it is accused of compliance deficiencies over this matter.

If you suspect that your losses are due to securities fraud, do not hesitate to contact The SSEK Partners Group today.

Securities and Exchange Commission v. Javier Martin-Artajo and Julien G. Grout, SEC, August 14, 2013

Read the SEC Complaint (PDF)

More Blog Posts:
US Will Likely Arrest Two Ex-JPMorgan Chase Employees Over Trading Losses Related to the London Whale Debacle, Institutional Investor Securities Blog, August 10, 2013

California AG Files Lawsuit Against JP Morgan Chase Alleging Debt Collection Abuse Over 100,000 Credit Card Cases, Stockbroker Fraud Blog, May 16, 2013

Bank of America, JPMorgan Chase Among Banks Sued by Danish Pension Funds in Credit Default Swaps Lawsuit, Institutional Investor Securities Blog, August 15, 2013