JPMorgan may pay $2bn to resolve Madoff-related cases
06 January 2014
JPMorgan Chase & Co, the international financial services giant, is starting the new year with a $2 billion payout to US federal authorities to resolve criminal and civil cases against it.
The cases are largely related to Bernard L Madoff's Ponzi scheme, The New York Times reported, citing people briefed on the case. This is just one of the several legal problems JP Morgan faces.
All told, after reaching the Madoff settlements with federal prosecutors in Manhattan and regulators in Washington, the bank will have paid some $20 billion to resolve government investigations over the last 12 months
JPMorgan's Madoff settlements would also involve a 'deferred prosecution agreement', or a criminal action that would essentially suspend an indictment as long as JPMorgan acknowledged the facts of the government's case and changed its behaviour.
The agreement, nearly unheard-of for a giant American bank and typically employed only when misconduct is extreme, underscores the magnitude of the case against JPMorgan, says the NYT report.
Under the terms of the deals with federal authorities, the bank will pay more than $1 billion to the prosecutors in Manhattan and the remainder to the Office of the Comptroller of the Currency and a unit of the Treasury Department investigating broader breakdowns in the bank's safeguards against money-laundering.
The government plans to earmark some of the payout for Madoff's victims, according to the people briefed on the case, who spoke on condition they not be named because they were not authorized to discuss private settlement talks, the report said.
JPMorgan at one point discussed a so-called tolling agreement with prosecutors that would essentially extend the five-year legal deadline for bringing a case, one person said. The deadline might have otherwise expired late last year.
JPMorgan declined to comment for this report, but has publicly maintained that "all personnel acted in good faith" in the Madoff matter. Officials of the various US government agencies involved also refused to comment.