Certified Forensic Loan Auditors, LLC

 
  Upcoming Classes

Search CFLA's Article Archive:

JPMorgan Execs Indicted for Book-Cooking

courthousenews.com | September 19, 2013

MANHATTAN (CN) - 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.

Martin-Artajo and Grout allegedly instructed head SCP trader Bruno Iksil not to report losses in the SCP unless they were tied to some identifiable market event, such as a bankruptcy filing by a company whose bonds were in the CDS index.

Iksil has entered a nonprosecution agreement, Uncle Sam noted.

The government says JPMorgan's accounting policy required CIO traders to generally mark the securities in the SCP approximately to a mid-point, which they sometimes referred to as the "crude mid," between the price at which market-makers were willing to buy or sell a security.

Grout meanwhile maintained a spreadsheet that kept track of the difference between the price that he recorded in JPMorgan's books and records, on the one hand, and the "crude mids," on the other, according to the indictment.

The difference had allegedly grown to approximately $292 million by March 15.

"In a recorded on-line chat the same day, Grout explained that he was trying to keep the marks for most of the SCP's positions 'relatively realistic,' with the marks for one particular security 'put aside,'" prosecutors said in a statement. "That is, Grout mispriced that one particular security, of which the SCP held billions of dollars' worth, by the full $292 million. The following day, Iksil told Martin-Artajo that the difference had grown to $300 million, and 'I reckon we get to 400 [million] difference very soon.' In a separate conversation, Iksil remarked to Grout that 'I don't know where he [Martin-Artajo] wants to stop, but it's getting idiotic.'"

Ignoring Iksil's instructions on how to mark the positions, Grout instead followed Martin-Artajo's mandate to continue to hide the losses, prosecutors say.

"These incorrect figures in the SCP were not only integrated into JPMorgan's books and records, but also - as Martin-Artajo and Grout were well aware - into the bank's quarterly financial filing for the first quarter of 2012 with the SEC," according to the Justice Department's statement.

JPMorgan stripped Martin-Artajo and Grout of their SCP responsibilities and their scheme was discovered in August 2012.

When the bank restated its first quarter 2012 earnings, it recognized an additional loss of $660 million in net revenue attributable to the mismarking of the SCP, prosecutors said.

Martin-Artajo, 49, a Spanish citizen, and Grout, 35, a French citizen, face one count of conspiracy; one count of falsifying the books and records of JPMorgan; one count of wire fraud; and one count of causing false statements to be made in JPMorgan's filings with the SEC. Convictions on all counts carry a maximum sentence of 65 years each, plus at least $5 million in fines.

 

Back to September 2013 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
spacer
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
 
BBB Logo

 

spacer
Contact us or view our Sample Documents & Audits by completing the form below.

  • Reload
  • Should be Empty:




 

DVD Sets Only $99

 

FREE Mortgage Fraud Analysis

 

Order Cutting-Edge Services Now

 

Quiet Title Packages from Licensed Attorneys

 

Affiliate Services

 

CFLA Sponsored Attorney Links

 

Take-Home Education Package

 

ALB Law Firm

 

Advocate Legal

 

The True News Network

 

Rubenstein Business Law

 

Atighechi Law Group

 

Scunziano & Associates

 

Get Certified to Perform Mortgage Securitization Audits

 

CFLA Training Academy

 

Expert Witness Services

 

Cutting Edge Expert Securitization Reports

 

CFLA Credit Cards

 

Breaking News

 

Letters to the Editor

 

CFLA Weekly Newsletters

 

Code of Ethics

 

Testimonials

 

Instructional Videos

 

Job Opportunities

 

License Opportunities

 

MARS Rule

 

Product Samples

 

Resource Links

 

Servicer Information

 

Foreclosure Laws

 

REST Report

 

Quiet Title Packages from Licensed Attorneys

 

Advertise on CFLA

 

Advertising Space: Mortgage Securitization, Quiet Title

 

Certified Forensic Loan Auditors, LLC
13101 West Washington Blvd.
Suite 444
Los Angeles, CA 90066

Toll Free: 888-758-CFLA (2352)
Mobile Users: CLICK TO CALL
info@certifiedforensicloanauditors.com

   
 
CFLA IS NOT A LAW FIRM AND DOES NOT PROVIDE ANY LEGAL ADVICE. CFLA DOES NOT OFFER FORECLOSURE CONSULTING OR FORECLOSURE RELIEF
SERVICES. CFLA DOES NOT OFFER OR ASSIST WITH ANY LOAN MODIFICATION SERVICE. CFLA ALWAYS RECOMMENDS THAT CLIENTS RETAIN COMPETENT COUNSEL IN THEIR RESPECTIVE JURISDICTION. CFLA HAS A FREE PROGRAM TO REFER CFLA CLIENTS TO LAW FIRMS IN NEARLY EVERY STATE AND CFLA
DOES NOT CHARGE OR OBTAIN REFERRALS FEES FOR THESE SERVICES. SERVICES NOT OFFERED TO RESIDENTS OF THE STATE OF NEVADA.

 
Home About Us Privacy Policy Terms of Service Disclaimer SERVICES Careers Contact Us
 
COPYRIGHT © 2007-2016 Certified Forensic Loan Auditors ™ All rights reserved