US prosecutors are still investigating JPMorgan Chase’s “London Whale” trading scandal for potential criminal wrongdoing, according to people familiar with the probe, in a sign that an expected US$700 million regulatory settlement may not put the issue to rest for the largest US bank.
Federal prosecutors in New York and FBI agents are piecing together the events that led JPMorgan to restate its last year first-quarter earnings and eventually reveal more than US$6 billion of losses from enormous bets a group of London-based traders made on illiquid credit derivatives, according to several sources.
News of the continuing criminal investigation was first reported by Reuters on Tuesday. Meanwhile, a source told Reuters the US Securities and Exchange Commission approved its portion of the civil settlement in a split vote.
The investigators are focusing on whether people inside the bank had more detailed knowledge about the potential losses than the bank had expressed in its early public statements about the matter, the sources said.
Two former bank employees - Javier Martin-Artajo and Julien Grout - have already been charged with trying to hide some of those losses by deliberately giving inaccurate values to the sophisticated securities involved in the trades. Authorities are trying to determine whether Martin-Artajo and Grout and others working with them had felt pressured to minimise the losses, the sources said.
Bruno Iksil, the trader whose large bets earned him the nickname “London Whale,” has signed a cooperation agreement with prosecutors and has not been charged with any wrongdoing.