FBI Meet JP Morgan Chase

JP Morgan Chase trading loss prompts FBI criminal case

New York Times Oct 12, 2012, 11.30AM IST

NEW YORK: Federal authorities are using taped phone conversations to try to build criminal cases related to the multibillion-dollar trading loss at JPMorgan Chase, focusing on calls in which employees openly discussed how to value the troubled bets in a favorable way.
Investigators are looking into the actions of four people who previously worked for the team based in London responsible for the $6 billion loss, according to officials briefed on the case. The Federal Bureau of Investigation could make some arrests in the next several months, said one person who spoke on the condition of anonymity because the inquiry was ongoing.

The phone recordings, which were turned over to authorities by JPMorgan, have helped focus the investigation, the officials said. Authorities are poring over thousands of conversations, both in English and French. They are also relying on notes that employees took during staff meetings, instant messages circulated among traders and emails sent within the group.
Authorities are examining how some traders in the chief investment office influenced market prices as their bets began to sour. Investigators are also looking into whether records were falsified to hide the problems from executives in New York. Based on those records, JPMorgan submitted inaccurate financial statements to regulators, another area of focus for investigators.
The scope of the inquiry suggests that the problems were isolated to a handful of executives and traders in an overseas division, and did not reflect a fundamental weakness with the bank's culture and the leadership.
The investigation does not appear to touch the upper echelons of the executive suite, notably Ina Drew who oversaw the chief investment office. The findings could insulate JPMorgan and its chief executive, Jamie Dimon, from further fallout.
Five months into the investigation, attention is centered on four people: Javier Martin-Artajo, a manager who oversaw the trading strategy from the bank's London offices; Bruno Iksil, the trader dubbed the London Whale for placing the outsize bet; Achilles Macris, the executive in charge of the international chief investment office; and a low-level trader, Julien Grout, who worked for Iksil and was responsible for marking the trading book.
The people briefed on the matter said the investigation was in the early stages, and federal prosecutors in New York had not made a decision about whether to file charges. None of the current or former employees have been accused of wrongdoing.
If they decide to bring charges, prosecutors will face significant challenges. Financial cases are notoriously difficult to prove in court. The intricacies of Wall Street