Feds expected to slap JPMorgan with fines in connection with Madoff scam

Bank could pay up to $2billion in fines for failing to alert authorities of potential fraud

Mega-bank JPMorgan Chase may have hoped to leave its legal troubles in 2013, but it appears it will start of 2014 in much the same way it spent last year, paying out billions to smooth over legal trouble.

Regulators are expected to announce $2 billion in penalties for the bank this week, stemming from JPMorgan’s failure to warn authorities about Bernie Madoff’s massive Ponzi scheme.  The actions, which are expected to include a differed-prosecution agreement with Manhattan U.S. Attorney Preet Bhara, may come as early as Jan. 7 the Wall Street Journal reports.

The majority of the fines are expected to be paid to the victims of Madoff’s scheme. Those close to discussions told WSJ that these funds will be routed through the Department of Justice (DOJ) and are expected to top $1.5 billion. The remaining fines will go to the Treasury Department by way of the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network.

JPMorgan denies it was complacent in the Madoff debacle, and hopes that the settlement will close the door on further investigation. The differed-prosecution agreement expected from Bhara would end further probes on the bank, contingent on its agreement to pay fines and a period of “good behavior” following that agreement.

In 2013 JPMorgan paid almost $20 billion to end investigations into multiple questionable activities. A derivatives trading scandal known as “the London whale” cost the bank $6 billion in settlements, and a $13 billion agreement with the DOJ in November ended investigations into issues with mortgage-backed securities JPMorgan sold in the run up to the financial crisis.

The bank has said previously that it would add considerable funds not only to a buffer for legal spend, but also to its compliance spending strategies.


For more on JPMorgan’s legal woes, check out these stories:

DOJ investigation reveals JPMorgan ignored red flags as early as 2006

JPMorgan to double compliance budget in 2014

J.P. Morgan posts third quarter losses

Executive Editor

author image

Chris DiMarco

Chris DiMarco, Executive Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.