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The Boston Globe

Business

Ex-JPMorgan trader arrested in $6 billion loss

MADRID — A former employee of JPMorgan Chase was arrested in Spain Tuesday, weeks after the US government charged him with hiding trading losses that ultimately reached more than $6 billion.

Spanish police said the former JPMorgan trader, Javier Martin-Artajo, surrendered after they made contact with him. His case will now work its way through Spain’s national court, whose duties include ruling on extradition requests.

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Martin-Artajo, a Spaniard who worked in JPMorgan’s London office, was released soon after his surrender on Tuesday. He agreed to remain at the disposal of the Spanish judiciary, but it was unclear whether his passport was confiscated, according to a judicial source who asked not to be named. The person would not confirm whether bail was posted.

The arrest in Spain underscores the logistical hurdles the case poses for US authorities, who recently charged Martin-Artajo along with a lower-ranking former JPMorgan employee, Julien Grout.

Federal prosecutors and the FBI in Manhattan initially planned to have British authorities arrest Martin-Artajo in London and begin his extradition proceedings. The authorities, people briefed on the matter said, issued an arrest warrant. But without knowing his arrest was planned, according to his lawyers, Martin-Artajo left London “on a long-planned vacation” to his native Spain.

Grout’s whereabouts also present a challenge to the authorities. After struggling to find work following his departure from JPMorgan, Grout left London this year for his native France, which typically does not extradite its citizens.

Grout’s lawyer, Edward Little, explained that his client also spent a brief period in the United States, where his wife’s family lives.

The criminal charges stem from a risky bet at JPMorgan’s chief investment office in London, where Grout and Martin-Artajo worked. The bet involved so-called credit derivatives, which allow the traders to bet on the perceived health of companies such as American Airlines.

When the bet soured in the spring of 2012, prosecutors claim, the traders deliberately overstated the value of their positions to hide hundreds of millions of dollars in losses.

The two former employees were charged with wire fraud, falsifying bank records, and contributing to false regulatory filings.

Prosecutors also charged them with conspiracy to commit those crimes.

Martin-Artajo’s lawyers did not respond to a request for comment Tuesday. In a previous statement, the lawyers said their client was “confident that when a complete and fair reconstruction of these complex events is completed, he will be cleared of any wrongdoing.”

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