Ex-JPMorgan traders, citing arrest risk, avoid N.Y. SEC depositionPosted On: Oct. 22, 2015 12:00 AM CST
(Reuters) — Two former JPMorgan Chase & Co. traders living abroad who face U.S. charges over the bank's $6.2 billion "London Whale" scandal won a bid on Wednesday to avoid sitting for a deposition in New York, where their lawyers say their arrest is likely.
The decision by U.S. District Judge George Daniels in Manhattan marked another setback for U.S. authorities, who have been unable to secure the extradition of the traders, Javier Martin-Artajo and Julien Grout.
The ruling came in a lawsuit by the U.S. Securities and Exchange Commission that was filed at the same time that federal prosecutors announced criminal charges against the traders in April 2013.
Messrs. Martin-Artajo and Grout face criminal charges including securities and wire fraud for hiding losses within JPMorgan's chief investment office in London by marking positions in a credit derivatives portfolio at inflated prices.
Those losses were part of an overall $6.2 billion trading loss suffered by the bank centered on Bruno Iksil, an ex-trader known as the "London Whale." Mr. Martin-Artajo supervised Mr. Iksil, while Mr. Grout worked for Mr. Iksil.
In 2013, JPMorgan agreed to pay more than $1 billion to settle U.S. and British probes into the losses.
U.S. authorities call both men fugitives. Mr. Martin-Artajo lives in Spain, where a court in April rejected his extradition to the United States, while Mr. Grout lives in France, which does not extradite its own citizens.
Soon after the Spanish decision, the SEC, whose civil case continued on, said it wanted to depose both men in New York.
Their lawyers objected, saying they faced certain arrest if they came to New York and that the SEC was seeking to force them into a significant default judgment by not appearing.
At a hearing Wednesday, Judge Daniels ruled that while he would not allow them to testify remotely at trial, they could be deposed abroad instead of New York as soon as April and that their depositions could be used in lieu of testimony at trial.
"The depositions are going to take place where the defendants are," Judge Daniels said. "They are going to take place in Spain, France or wherever the parties agree to go."
The defendants' lawyers welcomed the ruling, which Edward Little, one of Mr. Grout's lawyers, said "gives out client a chance to defend himself."
William Leone, Mr. Martin-Artajo's lawyer, said he looked forward to vindicating his client's interests.
SEC representatives did not respond to requests for comment.
The cases in U.S. District Court, Southern District of New York, are U.S. v. Martin-Artajo, No. 13-cr-00707, and Securities and Exchange Commission v. Martin-Artajo, No. 13-05677.