The 49-year old handed himself in to police this morning, after being contacted by investigators, almost two weeks after he was charged by US authorities alongside ex-employee Julien Grout, for their part in the the $6bn (£3.86bn) “London Whale” trading loss.
Mr Martin-Artajo oversaw the trading strategy at JP Morgan’s London investment office.
The pair were charged on August 14 by US regulator the Securities and Exchange Commission over the fraudulent overvaluing of investments in order to hide massive losses in a portfolio they managed.
A third trader, Bruno Iksil, executed the trades. Mr Iksil was nicknamed “Voldermort” and the “London Whale” over his dominant trading track record and large portfolio. He escaped the charges after signing a non-prosecution agreement with the SEC and is co-operating with the authorities.
Spain’s High Court has taken on the case and is expected to deliberate whether Spanish citizen Mr Martin-Artajo will be extradited to the US.
The SEC alleges that the former traders were required to mark a JP Morgan synthetic credit portfolio’s investments at fair value in accordance with generally accepted US accounting principles, and JP Morgan’s own internal accounting policy.
When the portfolio began experiencing mounting losses in early 2012, Mr Martin-Artajo and Mr Grout were alleged to have schemed to deliberately mismark hundreds of positions by maximising their value, instead of marking them at the mid-market, which would have revealed their losses of more than $660m (£424.61m).
Mr Iksil, while not blameless over the incident, had sounded the alarm “more than once” according to Preet Bharara, and would escape prosecution by testifying against his former boss and subordinate.
Spokesmen for the SEC, JP Morgan and the FCA declined to comment, however the FCA confirmed earlier this month that it was conducting ongoing formal enforcement investigations into the case.
A spokesman for the Serious Fraud Office would not comment on the arrest, or any potential action to be taken. She said: “We are liaising with our US counterparts, as well as the FCA over this case.”