The SEC charged two former traders at JPMorgan Chase with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.

The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio’s investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan’s internal accounting policy. But when the portfolio began experiencing mounting losses in early 2012, Martin-Artajo and Grout mismarked hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses.

Martin-Artajo and Grout began concealing the losses in March 2012 by providing management with fraudulent valuations of SCP’s investments.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Martin-Artajo and Grout.

“The trading instruments were complex but these traders had a simple rule to follow: tell the truth about their fair value,” said George S. Canellos, co-director of the SEC’s Division of Enforcement. “Yet these traders brazenly accumulated a massive position in derivatives with lax oversight, and then lied to cover up their massive losses when the market turned against them.”

For the entire SEC news release, click here.

To read a related WSJ story (subscription required) click here.

To read the agreement between the DOJ and Iksil, click here.

To read the complaint against Javier Martin-Artajo, click here.

To read the complaint against Julien Grout, click here.