Thursday, September 19, 2013

JPMorgan execs indicted for book-cooking

Federal prosecutors say two JPMorgan Chase executives cooked the books to hide losses in the credit derivatives trading portfolio that ultimately lost more than $6 billion.

Though the Synthetic Credit Portfolio (SCP), which consists of indices and tranches of indices of credit default swaps, has generated $2 billion in gross revenues since its inception in 2007, the SCP began sustaining consistent and considerable losses in the first quarter of 2012, according to the indictment.

From at least March 2012, Javier Martin-Artajo and Julien Grout allegedly conspired to disguise those losses by artificially manipulating the SCP marks.

Martin-Artajo had been a managing director at JPMorgan and the head of credit and equity trading at the bank's chief investment office. Grout was a vice president for the bank's chief investment office and an SCP trader.

They allegedly hoped in part that this would to avoid losing control of the SCP to other traders at JPMorgan.

The SCP lost approximately $130 million in January 2012 and approximately $88 million in February 2012, the Justice Department claims.

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