Report: Two ex-JPMorgan employees to be arrested in 'London Whale' investigation
By James O'Toole @jtotooleAugust 9, 2013: 7:32 PM ET
NEW YORK (CNNMoney)
Two former JPMorgan employees are set to be arrested for allegedly hiding losses on the bank's ill-fated "London Whale" trade, The New York Times reported Friday.
The two will be arrested in London within the next few days, the Times reported, citing anonymous sources. The men could then be extradited to the United States.
Spokespeople for JPMorgan(JPM), the FBI and the U.S. Attorney's office in Manhattan declined to comment.
JPMorgan revealed last year that it had sustained massive losses as a result of a complex bet by traders at its Chief Investment Office in London related to credit derivatives. The bet, which drew on federally insured deposits, was so large that the JPMorgan trader said to be responsible for it earned the nickname "the London Whale."
The losses eventually swelled to more than $6 billion, stoking renewed concerns about the stability of the nation's largest banks. JPMorgan has previously said it has recordings, emails and other documents that suggest traders may have been hiding the losses as they began to balloon.
A report on the botched trade issued in March by the Senate's Permanent Subcommittee on Investigations said JPMorgan had "disregarded multiple internal indicators of increasing risk; manipulated models; dodged [federal] oversight; and misinformed investors, regulators, and the public about the nature of its risky derivatives trading."
Regulators at the Federal Reserve and the Office of the Comptroller of the Currency ordered JPMorgan in January to improve its risk management and internal auditing in light of the losses. The bank did not face any monetary penalty at that time, consenting to the order without admitting or denying wrongdoing.