LONDON A former JPMorgan (JPM.N) trader charged in the United States over his alleged role in the $6.2 billion "London Whale" trading scandal has won the right to a legal challenge of the British regulator's decision to drop its investigation into him.
Lawyers said the trader, Julien Grout, might want the investigation to continue in Britain as its findings could affect the case against him in the United States.
A High Court judge ruled on Tuesday that Grout could bring a so-called judicial review of the Financial Conduct Authority's (FCA) decision to end its probe before he was able to respond to the allegations.
Richard Lissack, a barrister for Grout, said the FCA dropped its investigation because of pending U.S. charges. The review would challenge the rationality of that decision, Lissack said.
The London Whale was a nickname for Bruno Iksil, Grout's colleague in the London division of JPMorgan's Chief Investment Office. The division made some large bets on derivatives markets that went sour, stacking up losses of more than $6.2 billion.
JPMorgan was fined more than $1 billion by U.S. and British regulators in relation to the loss. Grout, who is based in France, and his former supervisor Javier Martin-Artajo face charges in the United States, including wire fraud and conspiracy to falsify books and records. Both deny any wrongdoing.
Iksil avoided charges by striking an immunity deal with U.S. prosecutors in exchange for cooperation.
Grout is also one of three men bringing cases against the FCA relating to a statement it published alongside the fine it imposed on JPMorgan over the London Whale scandal in September 2013. He alleges he can be identified in the statement.
Former JPMorgan executive Achilles Macris has also challenged the FCA over the London Whale case, saying he should have been given the right to respond to allegations set out in the regulator's public statement on the fine.
The FCA has said it did not give Macris these so-called "third party rights" because it did not think he could be identified in the statement. But a tribunal found against the regulator in April.
(Editingn by Jane Merriman)