A former JPMorgan Chase trader said Tuesday that the government was making him a scapegoat for the "London whale" trades while letting off his boss.
Lawyers for Julien Grout, who was indicted by a grand jury Monday for fraud and false securities filings in the case, said that he acted under orders from his managers in masking the massive derivatives losses that rocked the bank last year.
Grout, who worked under senior trader Bruno Iksil in JPMorgan's London office, "has been unjustly used as a pawn in the government's attempt to settle its highly politicized case against JPMorgan Chase," said Edward Little, an attorney for Grout at Hughes Hubbard & Reed LLP.
"It is incredible" that Iksil "got a deal from the government allowing him to escape all charges in return for testimony against his own junior trading assistant," Little said.
Iksil, who has not been charged in the case, was responsible for misreporting the losing trades that eventually turned into a $6.2 billion loss for JPMorgan, Little said in an emailed statement.
He "taught Mr. Grout how the bank was marking the portfolio, gave specific instructions on where he should mark positions, and personally approved the marks on a daily basis," he said.
"Mr. Grout was totally dependent on Iksil's instructions and relied in good faith on his expertise."
In the indictment Monday, the grand jury indicted Grout and another man, Javier Martin-Artajo, who led the London office of JPMorgan Chase's Chief Investment Office, which ran the bank's in-house trading portfolio.
The indictment said the two along with others manipulated and inflated the trading positions of their office to show better gains than they actually had, and to cover up losses.
The indictment suggests that Iksil, identified only as an unindicted co-conspirator, consistently resisted covering up the losses as they mounted to the hundreds of millions of dollars in early 2012.
Grout reported to Martin-Artajo and "engaged in this scheme in order to curry favor with his supervisor" and to gain bonuses and promotion, the indictment said.
Grout, believed to be in France, and Martin-Artajo, who was arrested in Spain at the end of August, face charges of conspiracy to falsify books and records, to commit wire fraud, to make false filings with the Securities and Exchange Commission, and to commit securities fraud.
Little told AFP Tuesday that the law firm was in discussions with US authorities over whether Grout would travel to the US to defend himself in the case.