Ex-JPMorgan trader in $6B loss arrested in Spain

A former JPMorgan Chase & Co. trader wanted by the United States for allegedly falsifying bank records to cover up $6 billion in trading losses was arrested in Madrid on Tuesday, Spanish police said.

A statement said Spaniard Javier Martin-Artajo, 49, was arrested after he presented himself to police in Madrid, who had located and asked him to turn himself in. U.S. prosecutors earlier this month filed criminal charges against Martin-Artajo and another ex-JPMorgan trader, Julien Grout.

The two were accused of marking up the market value of an investment portfolio to hide its plummeting value. The portfolio eventually incurred a $6- billion loss for JPMorgan, the biggest U.S. bank by assets. After its disclosure, the shortfall was attributed to Bruno Iksil, a trader who became known as the "London Whale" because his portfolio was so large. Martin-Artajo was Iksil's supervisor at JPMorgan's chief investment office in London.

Martin-Artajo was taken before a National Court judge, who released him without bail after an hour of questioning but prohibited him from leaving Spain.

A court spokesman said Martin-Artajo denied the U.S. charges, saying they were based on a false accusation. He said he will challenge any extradition request. The United States now has 40 days to formalize the request.

Grout, who was also based in London and reported to Iksil, is a citizen of France and has not been arrested.

Martin-Artajo oversaw JPMorgan's trading strategy in London, and Grout was in charge of recording the value of the investments each day.

They were charged with conspiracy to falsify books and records, commit wire fraud and falsify Securities and Exchange Commission filings. They also were charged separately in an SEC civil complaint.

The "London Whale" accusations have been a heavy burden for JPMorgan, tarnishing its reputation as a risk manager and the favorite of Washington lawmakers. The bank, which is used to coming out ahead of its peers, has been forced to restate its earnings and face bruising hearings in front of Congress.

AP, with Reuters