JPMorgan Chase & Co. (NYSE:JPM) is close to a settlement with federal authorities in the Bernie Madoff case, sources familiar with the matter told Jessica Silver-Greenberg and Ben Protess of the New York Times. The deal is likely to involve a rare criminal action and about $2 billion in penalties. The authorities will use a large part of that penalty to compensate the victims who lost billions of dollars in Bernard Madoff’s Ponzi scheme. Arrested in 2008, Madoff is currently serving a 150-year jail term.
JPMorgan was the primary banker of Madoff
Sources said that the settlement will include a deferred prosecution agreement and over $1 billion fine. The remaining penalty will be imposed by the Comptroller of the Currency, which is investigating loopholes in JPMorgan Chase & Co. (NYSE:JPM)’s money laundering safeguards. If JPMorgan Chase & Co. (NYSE:JPM) pays the penalties and acknowledges its fault, the deferred prosecution agreement would list its criminal violations, but wouldn’t go for an indictment.
A deferred prosecution agreement is deployed only in rare cases of severe misconduct. Regulators and Bernie Madoff have reiterated that JPMorgan Chase & Co. (NYSE:JPM) was aware of Madoff’s Ponzi scheme. The nation’s largest bank has been Madoff’s primary banker for more than two decades. Bernie Madoff duped regulators and clients for several decades. Investors lost more than $17 billion in his Ponzi scheme, and paper losses reached a whopping $64 billion. Meanwhile, JPMorgan Chase & Co. (NYSE:JPM) keeps saying that its employees have acted in good faith while dealing with Bernie Madoff.
JPMorgan tightens its structure and policy
JPMorgan Chase & Co. (NYSE:JPM) has said that it would cut ties with several clients and scale back certain businesses that are vulnerable to money laundering. This settlement comes only two months after the bank agreed to pay $13 billion to settle the mortgage securities case. Federal scrutiny has tarnished JPMorgan Chase & Co. (NYSE:JPM)’s reputation in recent months. It has also affected the bank’s influence in Washington, where regulators and officials have grown skeptical of JPMorgan Chase & Co. (NYSE:JPM)’s lobbying.
JPMorgan Chase & Co. (NYSE:JPM) shares inched up 0.20% to $56.18 at 11:51 AM EST. The stock is up 27.84% this year so far.