The employees -- Javier Martin-Artajo, a manager who oversaw the trading strategy, and Julien Grout, a low-level trader in London -- could ultimately be extradited under an agreement with British authorities. Yet the people briefed on the matter, who spoke on the condition of anonymity, cautioned that it is unclear whether British authorities will be able to locate the men, who are natives of other European countries.


After more than a year of gathering evidence about the losses, federal prosecutors and the F.B.I. in Manhattan have concluded that the two employees understated the value of their trades to hide the problem from executives in New York. Poring over internal e-mails and phone recordings that shine a light on how the employees valued the trades, authorities came to believe that Mr. Martin-Artajo directed Mr. Grout to falsify internal records.


The case also comes at a time when JPMorgan, which recently reported record quarterly profits, is already grappling with an array of regulatory woes. The bank faces inquiries from at least eight federal agencies, a state regulator and two European nations. Adding to its headaches over the trading losses, authorities are investigating the bank in connection with its financial crisis-era mortgage business. The bank, for example, recently disclosed that federal prosecutors in California are investigating whether it sold troubled mortgage securities to investors before the crisis. Regulators are also examining flaws in the bank's debt collection practices.

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