Comments
JPMorgan Chase will pay a $1.7-billion fine for failing to report suspicious activities by Bernard Madoff, a jailed investor whose financial scheme eventually cost his clients billions of dollars.
Under the terms of the deal, the US bank will pay the fine to victims of Madoff’s fraud and admit to its conduct, according to a statement by federal prosecutors. The US government claimed JPMorgan Chase – the largest US bank by assets – facilitated Madoff’s scheme.
JPMorgan Chase also agreed to upgrade operations to prevent money laundering. In exchange, criminal charges will be deferred for two years, according to the US attorney for the southern district of New York.
In addition, the bank separately agreed to pay $543 million to deal with private claims.
The penalty comes less than two months after the banking powerhouse agreed to a record $13-billion settlement with the federal government over another issue: its role in mortgage-related practices leading up to the 2008 financial crisis.
In the current fine, Madoff, 75, was arrested in 2008 as his business – which relied upon ever new cash intake to pay clients cashing out – fell apart amid the global financial crisis. While the books showed $65 billion in deposits, the actual amount was only $300 million, according to prosecutors.
Madoff confessed to running the fraud, which cost investors about $17 billion. He was prosecuted and received a 150-year jail sentence in 2009. His clients ranged from celebrities to ordinary savers.
Many of Madoff’s victims complained that JPMorgan Chase and other Wall Street investment banks ignored his wrongdoing to continue receiving fees. Madoff maintained accounts with JPMorgan for more than 20 years.
An initiative set up by trustees has recovered $9.5 billion, a little more than half the amount lost, by reaching settlements and suing Madoff’s business partners.
The US district attorney said the $1.7-billion fine was the largest-ever bank forfeiture on record and the largest ever Department of Justice penalty.
JPMorgan agreed last year to pay a total of $15.7 billion to resolve other US regulatory probes involving the bank’s sale of the risk-prone mortgage bonds blamed for touching off the financial crisis and energy trading.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.