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JPMorgan’s London Whale Helping Feds for Possible Arrests

The trader behind JPMorgan’s leviathan trading fiasco is reportedly helping US authorities as they investigate two of the London Whale’s associates. Will it be handcuffs for cuff links soon?

As the SEC works on JPMorgan Chase's admission of wrongdoing in the $6 Billion London Whale disaster, we now learn that the trader himself is helping US authorities. In exchange for his help and avoiding jail time, Bruno Iksil is helping the Feds to build a case against the trader’s former supervisor and senior associate.

Reuters and other media outlets are reporting that authorities are zeroing in on Javier Martin-Artajo, Iksil's direct supervisor, and Julien Grout, Iksil's junior trader. Martin-Artajo and another employee were fired from the investment bank after news of the multi-billion dollar loss went public while Grout stayed on with the firm.

[SEC to JPMorgan, Jamie Dimon and Crew: Admit It Was Wrong!]

As Reuters reports, "The investigation is focusing on whether anyone responsible for the trades tried to deliberately mismark them by inflating the value at which they were recorded on JPMorgan's books at the height of the scandal, which took place during the first half of 2012."

Since the discovery of the outsized trades and the fallout that caused the losses the swell, JPMorgan has been fighting to defend itself and restore its image. CEO and chairman Jamie Dimon testified before both house of Congress and had to fight for the chance to retain both job titles from shareholders livid over his stewardship during "L'Affaire London Whale.' He also saw his 2012 pay slashed by the JPMC board as well. As we reported last week, the bank may have to admit wrongdoing in the incident as the SEC pushes for a fine and an admission that management erred when the trades imploded.

No one is speculating when the arrests will take place, but the news that the London Whale is cooperating with authorities shouldn't be that surprising. Despite the spectacular foolishness of his bets, we can be imagine that Iksil knew that he was going to be left out to dry. Fans of gangster movies know that all wise guys have two choices: sing to the Feds or await the bullet in the back of the head. Will the Feds take a page from Goodfellas and put Iksil in the Trader Protection Program?

Or maybe Bruno can replace the E*Trade baby in the TV commercials.

Stay tuned.

[Moneybrawl: Michael Lewis Takes on the sorry state of HFT inside Goldman Sachs.]

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio

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Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
8/14/2013 | 7:51:47 PM
re: JPMorgan’s London Whale Helping Feds for Possible Arrests
Yep, it seems the cover up is the crime now. According to the WSJ: "Prosecutors charged Javier Martin-Artajo, a Spaniard in charge of the
team that made the giant wagers in corporate-credit investments that
piled up losses early in 2012, and Julien Grout, a Frenchman responsible
for recording daily values on the positions." http://on.wsj.com/15E13ot
IvySchmerken
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IvySchmerken,
User Rank: Author
8/14/2013 | 2:51:29 PM
re: JPMorgan’s London Whale Helping Feds for Possible Arrests
Is it ironic that Iksil is not being penalized by regulators. He devised the complicated CDS index strategy which got out of control. But his cooperation with authorities may have unravelled the cover up. While it's a cliche, the cover up is often worse than the crime.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
8/13/2013 | 11:50:39 AM
re: JPMorgan’s London Whale Helping Feds for Possible Arrests
Iskil will 'sing,' no doubt. But all of his singing won't make for a great story like Goodfellas. Somehow inflating trades and shady bookkeeping doesn't compare to Goodfellas' drugs and murder.
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