JPMorgan: Still Counting Losses from London Whale


“The ‘London Whale’ episode not only cost us money,” commented JPMorgan (NYSE:JPM) Chairman and CEO Jamie Dimon in an April letter to shareholders, “it was extremely embarrassing, opened us up to severe criticism, damaged our reputation and resulted in litigation and investigations that are still ongoing.”

It’s a mixed blessing, but those investigations may finally have an end in sight. On Wednesday, the Securities and Exchange Commission issued a litigation release that could be among the last associated with the incident, formally alleging that Javier Martin-Artajo and Julien Grout, two former traders at the bank, fraudulently overvalued investments in order to hide losses in their portfolio.

“When the portfolio began experiencing mounting losses in early 2012,” reads the statement, “Martin-Artajo and Grout schemed to deliberately mismark hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses. Their mismarking scheme caused JPMorgan’s reported first quarter income before income tax expense to be overstated by $660 million.”