JP Morgan signed a deferred prosecution agreement with the Department of Justice for not reporting suspicions raised by Morgan’s own staff that the trading in Madoff’s accounts was suspicious.
The Wall Street Journal reports: J.P. Morgan to Pay $1.7 Billion to Victims of Madoff Fraud.
The DPA, which you can read here, says several staff identified odd items in various Madoff related accounts that were peculiar. Those concerns were forwarded to a few offices inside JPM but didn’t get forwarded as they ought to the group that files Suspicious Activity Reports.
Penalties include the following, according to the WSJ:
- $1.7B – paid to the recovery fund – JPM also renounces any claim against the recovery fund and agrees it will not take a tax deduction for the $1.7B according to the DPA.
- $350M – paid to OCC in separate settlement
- Unknown – amount expected to be paid to group in Treasury Department that monitors money laundering programs.
- $543M – Separate settlement with bankruptcy trustee
That is approaching $3B for this fiasco. May go over 3 with the Treasury settlement.
I haven’t read enough to have a personal opinion on this case.