Ex-JPMorgan Trader Wins Review of FCA’s Decision to Drop Probe

Bloomberg | Jeremy Hodges

Former JPMorgan Chase & Co. (JPM) trader Julien Grout was granted a court review of a U.K. regulator’s decision to drop him from a probe into a $6.2 billion trading loss before he was allowed to respond to the allegations.

Richard Lissack, Grout’s lawyer, told the London court today that the decision by the Financial Conduct Authority was “irrational and unlawful.” The FCA dropped its probe into Grout because of pending U.S. charges, Lissack said.

JPMorgan agreed in September to pay about $920 million to settle U.S. and U.K. investigations into the losses stemming from Bruno Iksil, the Frenchman who became known as the London Whale for the size of his positions. The U.S. also filed criminal charges against Grout and Javier Martin-Artajo, who oversaw synthetic credit trading at the bank’s chief investment office in London.

“The next stage in Mr. Grout’s investigation would have been the issuing of a preliminary investigation report by the FCA addressing the specific allegations against him which, importantly, would be Mr. Grout’s first opportunity to fully understand the case against him and to respond to it,” lawyers for Grout said in court documents.

The FCA report into the trading loss at JPMorgan has drawn objections from at least three of the New York-based bank’s former employees.

FCA Challenges

Grout is making another challenge to the FCA at a different court later this month, claiming he can be identified in its final report on the London Whale loss. Martin-Artajo asked the tribunal last month for more time to challenge the regulator’s findings.

Achilles Macris, another JPMorgan executive, won a challenge against the regulator in April, claiming he should’ve been allowed to respond to the FCA’s findings before they were published in the September settlement with JPMorgan.

The U.S. has started proceedings to extradite Martin-Artajo from Spain. Grout, who wasn’t in court, “is in France, as a French national he is, as it were, safe there,” Lissack said.

Grout won’t face a fair trial in the U.S. if he is tried in absentia, Judge Andrew Collins said when granting the judicial review to be heard later this year.

The FCA decided to drop its probe into Grout in December, the regulator said in court documents.

It was “not a proportionate use of resources to continue the investigation” into Grout given the U.S. investigation, Paul Stanley, a lawyer representing the FCA, said in the filing.

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