JPMorgan Chase & Co. (NYSE:JPM) plans to reach this week about $2 billion in criminal and civil settlements with federal authorities over Madoff case.
JPMorgan John Harrington

The settlement relates to the federal authorities suspecting JPMorgan Chase & Co. (NYSE:JPM) ignored signs of Bernard L. Madoff’s Ponzi scheme.

JPMorgan’s Madoff settlements

Citing people familiar with the case, Jessica Silver-Greenberg and Ben Protess of Dealbook point out JPMorgan Chase & Co. (NYSE:JPM)’s Madoff settlements would also involve a so-called deferred prosecution agreement, a legal action that would essentially suspend an indictment as long as JPMorgan acknowledged the facts of the government’s case and changed its behavior. Such agreements are typically employed only when misconduct is extreme and thus underscores the magnitude of the case against JPMorgan.

Last month it was reported the large part of penalties of about $2 billion will be used by the authorities to compensate the victims who lost billions of dollars in Bernard Madoff’s Ponzi scheme. Madoff was arrested in 2008 and is currently serving a 150-year jail term.

Federal actions could be announced Tuesday

According to The Wall Street Journal report, the federal actions that include a deferred-prosecution agreement with Manhattan U.S. Attorney Preet Bharara, and could be announced as early as Tuesday. It is believed the action by the Office of the Comptroller of the Currency will highlight larger control weaknesses beyond the bank’s dealings with Mr. Madoff who had a two-decade-long relationship with JPMorgan Chase & Co. (NYSE:JPM) before his arrest in December 2008.

Earlier it was anticipated that a criminal case against JP Morgan could trigger a review of its banking charter.

Bernard Madoff, one of the most notorious financial criminals in living memory, orchestrated a Ponzi scheme in which investors lost over $17 billion. JP Morgan was Bernard Madoff’s banker for about two decades. The bank’s national banking unit has reportedly violated the Bank Secrecy Act, which mandates that banks report any suspicious activity to the government.

Last year, Madoff disclosed that large banks like JPMorgan Chase & Co. (NYSE:JPM) knew that his brokerage firm was a Ponzi scheme. He also provided evidence that banks knew a great deal about his Ponzi schemes.