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JP Morgan to pay $1.7bn to victims of the Madoff fraud JP Morgan to pay $1.7bn to victims of the Madoff fraud
(about 3 hours later)
JP Morgan Chase has agreed to pay $1.7bn (£1bn) to victims of the Bernard Madoff fraud following a settlement with US prosecutors.JP Morgan Chase has agreed to pay $1.7bn (£1bn) to victims of the Bernard Madoff fraud following a settlement with US prosecutors.
The settlement comes after Federal prosecutors accused the bank of ignoring red flags about Madoff's crimes.The settlement comes after Federal prosecutors accused the bank of ignoring red flags about Madoff's crimes.
"We recognize we could have done a better job," said JP Morgan spokesperson Jennifer Zuccarelli."We recognize we could have done a better job," said JP Morgan spokesperson Jennifer Zuccarelli.
The bank has agreed to improve its controls as part of the settlement.The bank has agreed to improve its controls as part of the settlement.
No jailNo jail
While JP Morgan acknowledged failures in its protections against money laundering, the settlement includes a so-called deferred prosecution agreement that allows it to avoid criminal charges. The settlement includes a so-called deferred prosecution agreement that allows it to avoid criminal charges.
No individual executives were accused of wrongdoing.No individual executives were accused of wrongdoing.
JP Morgan was Madoff's primary bank in the later years of a fraud that lasted for decades.JP Morgan was Madoff's primary bank in the later years of a fraud that lasted for decades.
The bank had a relationship with Madoff dating back to 1986, according to documents released by the US Attorney's office.The bank had a relationship with Madoff dating back to 1986, according to documents released by the US Attorney's office.
It ended in 2008 when Madoff revealed to the FBI that his investment advisory business was a Ponzi scheme.It ended in 2008 when Madoff revealed to the FBI that his investment advisory business was a Ponzi scheme.
According to the complaint, Madoff's account - account 703 - received deposits and transfers totalling $150bn over the period from 1986 until the fraud was discovered in 2008, almost exclusively from Madoff Securities.According to the complaint, Madoff's account - account 703 - received deposits and transfers totalling $150bn over the period from 1986 until the fraud was discovered in 2008, almost exclusively from Madoff Securities.
JP Morgan employees began raising red flags about the account from the late 1990s up until 2008, but no action was taken to alert US regulators.JP Morgan employees began raising red flags about the account from the late 1990s up until 2008, but no action was taken to alert US regulators.
The 75-year-old Madoff pleaded guilty to the fraud and is currently serving a 150-year prison sentence in the US.The 75-year-old Madoff pleaded guilty to the fraud and is currently serving a 150-year prison sentence in the US.
Mounting finesMounting fines
Over the past year, JP Morgan has paid close to $20bn in settlements with regulators for various violations relating to the US financial crisis, the so-called "London whale" trading loss, and manipulating the London inter-bank offered rate, or Libor.Over the past year, JP Morgan has paid close to $20bn in settlements with regulators for various violations relating to the US financial crisis, the so-called "London whale" trading loss, and manipulating the London inter-bank offered rate, or Libor.
JP Morgan boss Jaime Dimon has taken a proactive stance in ridding the bank of various investigations into its practices over the past year.
In his annual letter to shareholders from April 2013, Mr Dimon wrote: "I feel terrible that we let our regulators down".In his annual letter to shareholders from April 2013, Mr Dimon wrote: "I feel terrible that we let our regulators down".
The bank is still facing scrutiny from US regulators over its hiring policies in China. Columbia University law professor John Coffee says this settlement is simply indicative of the bank's efforts to clear its name.
Shares in JP Morgan fell slightly on news of the settlement. "Again, this shows mainly that JP Morgan is determined to settle and the quicker the better," Prof Coffee told the BBC.
"The one remaining large obstacle is China and the Foreign Corrupt Practices Act", a reference to charges that JP Morgan selectively hired the sons and daughters of China's elite as a way to gain entry into the market.
Shares in JP Morgan fell slightly on Tuesday.