JPMorgan Chase to pay $2.6 billion to resolve Madoff allegations

The bank admitted no criminal doings but said it “could have done a better job”

The hammer has come down on J.P.Morgan Chase in connection with Bernie Madoff’s Ponzi scheme, and the price tag is a stiff one: $2.6 billion.

Regulators announced on Jan. 7 that the bank will be expected to pay the sum to resolve charges that it failed to police Madoff’s activities. J.P. Morgan also entered into a pact with prosecutors to provide information in exchange for being absolved from criminal charges.

U.S. Attorney Preet Bharara, who has handled the Madoff case and conducted his investigation with the FBI, said at a news conference that J.P. Morgan “failed miserably” at its job as a bank and should have had “plenty of reasons to be uniquely suspicious” concerning Madoff’s doings.

The settlement comes nearly one month after CEO Jamie Dimon met personally with Bharara to discuss settlement terms. While JPMorgan does not admit active criminal liability, the agreement with prosecutors gives the government another weapon through which to attack Madoff in court.

 “We recognize we could have done a better job pulling together various pieces of information and concerns about Madoff from different parts of the bank over time,” a J.P. Morgan spokesman told The Wall Street Journal. “We do not believe that any J.P. Morgan Chase employee knowingly assisted Madoff's Ponzi scheme.”

Among the statements of fact that J.P. Morgan admitted to, as compiled by the WSJ, are that an internal 2008 memo raising concerns about Madoff Securities led to a suspicious activity report in the U.K., but not in the U.S., and that a U.S. “high-ranking compliance officer” knew about the suspicious activity after the U.K. report but failed to do anything about it. JPMorgan also admitted that no employees shared concerns about Madoff with the bank’s anti-money laundering staff.

Through the agreement, victims of Madoff’s crimes will receive $2.24 billion of J.P. Morgan’s payment. That increases the total amount collected for victims to $14.1 billion, close to the $17.5 billion in principal lost through Madoff’s schemes.

 

For more on JPMorgan’s legal woes, check out these recent InsideCounsel articles:

GCs speak out on their 2014 risk and compliance concerns

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

JPMorgan and Deutsche Bank join ban on multiparty chat rooms

Mississippi AG files lawsuit against JPMorgan alleging misconduct

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