Spaniard held in Madrid over huge JP Morgan Chase trading loss

Javier Martín-Artajo, a Spanish former London-based trader for JP Morgan Chase, was arrested by Spanish police on Tuesday in Madrid following an extradition request from the US authorities in connection with alleged fraud he committed in trying to cover up huge trading losses made by the US investment bank.

Martín-Artajo and fellow French trader Julien Grout at JP Morgan Chase have been charged by the US Department of Justice on four counts of falsifying records, wire fraud and making false statement to the US Securities and Exchange Commission in attempting to hide trading losses of six billion dollars they incurred. They face up to 25 years in jail.

The Spaniard had handed himself in to a police precinct in Madrid on Tuesday and was brought before High Court Judge Santiago Pérez. After having his passport withdrawn, he was released while the judge awaits documentation from the US authorities on their extradition suit.

The so-called London Whale scandal broke in 2012 when JP Morgan Chase was obliged to acknowledge the hole in its books that it had suffered as a result of trades in derivatives made under the supervision of Martín-Artajo and Grout. Between March and May of 2012, Martín-Artajo and Grout allegedly inflated the value of trading positions they had taken.

Martín-Artajo is being represented by the London firm Norton Rose Fulbright, who have issued a statement on the Spaniard’s behaving saying he is confident he will be cleared of any wrongdoing.