This page has been archived and commenting is disabled.

"It's Laughable Really": Why No One, Especially Not Jamie Dimon, Will Be Held Accountable For London Whale

Tyler Durden's picture




 

A few weeks back, Bruno Iksil, the man whose name shall live in CDX trading infamy and whose nicknames will forever haunt the desks at JP Morgan’s taxpayer-sponsored, London-based hedge fund (known in polite circles as "CIO"), got a break when the UK’s financial watchdog dropped its investigation saying it didn’t have a strong enough case. 

Apparently, the fact that Iksil was the driving force (if not the most senior of the employees involved) behind a trade so large it noticeably displaced the market doesn’t count as a "strong case." Indeed, the simple fact that Iksil was known across trading desks as "Voldemort", "The London Whale", and perhaps most telling, "He Who Must Not Be Named," might fairly be said to constitute a compelling bit of anecdotal evidence. Alas, the whale is now scott-free, having secured immunity in the US in exchange for cooperating with the investigation and having been exonerated in the UK. 

As we noted in "Free Willy: FCA Drops Case Against London Whale," junior trader Julien Grout and Iksil’s boss Javier Martin-Artajo are still theoretically on the hook for the trade which, as a reminder, saw CIO sell massive amounts of protection on IG.9 back in Q1 of 2012 in what ultimately became a rather poignant example of the old adage "if you find yourself in a hole, stop digging."

We say "theoretically on the hook", because in all likelihood, Grout and Martin-Artajo will never have to face the music either. Here’s NY Times with more on why "in all likelihood, no one will be held legally accountable":

The case of the London Whale has ended — with a whimper.

 

Last week, Britain’s Financial Conduct Authority took the unusual step of announcing that it was dropping its investigation and would take no further action against Bruno Iksil, whose risky bets on complex derivative contracts ended up costing JPMorgan Chase $6.2 billion in losses.

 

Today Mr. Iksil, 48, faces no charges. He does not even face civil claims, which have a much lower standard of proof. Preet Bharara, the United States attorney in Manhattan, disclosed in August 2013 that the government had entered into a nonprosecution agreement with Mr. Iksil, and that he would not be required to plead guilty to any crime. The Securities and Exchange Commission took no action against him. And now British regulators have dropped the case.

 

The result has left many white-collar defense lawyers mystified, even as they profess admiration for Mr. Iksil’s lawyers. While Mr. Iksil has emerged scot-free, his immediate boss, Javier Martin-Artajo, a Spanish national, and Mr. Iksil’s lower-ranking assistant, Julien Grout, who is French, face criminal charges and civil claims. But Mr. Martin-Artajo is in Spain, where a court has refused to extradite him, and Mr. Grout is in France, which typically does not extradite its own citizens. Although the investigation in the United States officially remains open, it appears no one, in all likelihood, will be held legally accountable.

 

(Martin-Artajo)

And while it’s easy to write this off as yet another example of how no humans are ever held accountable for what happens when TBTF banks (with the implicit blessing of the US government via FDIC insurance) go all-in at the derivatives baccarat tables, the London Whale may also represent the tendency for regulators and prosecutors to place the blame on anyone but those who ultimately deserve it. Here's the Times again:

Far from being the rogue trader portrayed in early news coverage, Mr. Iksil emerges in government documents and interviews with people familiar with much of the evidence as a conflicted figure on the trading floor, troubled by conscience, even as he tried to please his bosses. They pushed him to undertake the risky derivatives trading that proved his undoing and caused the great losses. Then, as the losses mounted, he repeatedly warned his colleagues that they should be more forthcoming about their extent, to no avail.

 

"It’s laughable, really, that so many banks have been prosecuted and it’s always the fault of a rogue trader, or an isolated trading desk," said Brandon L. Garrett, a law professor at the University of Virginia and author of the book "Too Big to Jail." "But when risky behavior is repeatedly tolerated or concealed, you have to wonder if higher-ranking people should have been targeted."

Yes, you do have to wonder about that.

But as the ridiculous witch-hunt against flash crashing "mastermind" Nav Sarao proves, vested interests and well paid lobbyists will everywhere and always trump the truth, which is why, through it all, Jamie Dimon has not only managed to escape blame for the CIO fiasco, but has in fact become a billionaire in the interim. 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 07/22/2015 - 19:34 | 6343324 JLee2027
JLee2027's picture

Lost billions? No problem, just don't tell US Citizens the NSA spys on them.

Wed, 07/22/2015 - 19:54 | 6343396 Eireann go Brach
Eireann go Brach's picture

You need to be a Billionaire and have the Kenyan in chief on speed dial to escape the legal authorities these days!

Wed, 07/22/2015 - 20:41 | 6343544 ArkansasAngie
ArkansasAngie's picture

Graveyards and indispensable people

This is the outrage.

This is what must be stopped

 

Without putting lawbreakers in jail the robber barons are in charge.

Wed, 07/22/2015 - 19:34 | 6343325 ted41776
ted41776's picture

accountability is for the peasants not for royalty

Wed, 07/22/2015 - 19:38 | 6343330 Never One Roach
Never One Roach's picture

He's not a little peeple; Law doesn't apply.

Wed, 07/22/2015 - 20:52 | 6343588 SHRAGS
SHRAGS's picture

... only for a SIFI.  That's the game now, massive size & scale enabling "reverse extortion" -to be able to hold a gun to your own head & blow up everyone else as well.

Wed, 07/22/2015 - 19:42 | 6343345 dicksburnt
dicksburnt's picture

he was just doing god's work

Wed, 07/22/2015 - 20:41 | 6343457 Normalcy Bias
Normalcy Bias's picture

Laws for thee, and not for me!

Wed, 07/22/2015 - 20:43 | 6343557 spanish inquisition
spanish inquisition's picture

Magic cuff links.

Wed, 07/22/2015 - 20:47 | 6343566 PhiBetaZappa
PhiBetaZappa's picture

Held Accountable - in the "new normal". ROFLMAO

Wed, 07/22/2015 - 21:13 | 6343670 RaceToTheBottom
RaceToTheBottom's picture

Accountability is in the same place as Accounting.  In the Banksters dumpster.

Wed, 07/22/2015 - 21:28 | 6343716 Budnacho
Budnacho's picture

You know guys....Long-Distance Shooting is a relaxing and fun pastime...Never been a better time to learn!

Thu, 07/23/2015 - 00:46 | 6344216 lost money
lost money's picture

each one gets immunity to rat on the other ones. tells you how stupid law enforcement is, in cahoots or both

Thu, 07/23/2015 - 02:40 | 6344371 Tarshatha
Tarshatha's picture

Just a shot in the dark, bet he's a member of the tribe.

Thu, 07/23/2015 - 09:17 | 6344936 whatthecurtains
whatthecurtains's picture

"Why No One, Especially Not Jamie Dimon, Will Be Held Accountable For London Whale.."

Being friends of Bill and Hill doesn't hurt either

Do NOT follow this link or you will be banned from the site!