JPMorgan Chase Settles Madoff Case For $1.7 Billion
DAVID GREENE, HOST:
This is MORNING EDITION from NPR News. I'm David Greene.
RENEE MONTAGNE, HOST:
And I'm Renee Montagne. And some news this morning, JPMorgan Chase has agreed to pay $1.7 billion to settle charges related to the bank's Secrecy Act and we're going to be joined by NPR's Jim Zarroli. Good morning.
JIM ZARROLI, BYLINE: Good morning.
MONTAGNE: So let's hear what the government says about JPMorgan Chase's role.
ZARROLI: Well, JPMorgan was Madoff's primary bank during most of the time he had his investment business. You may remember, he was taking in billions of dollars from investors - including some rich and famous ones and telling them that they were getting big returns, all the returns were really fictional - it was a Ponzi scheme, a lot of people lost everything. Madoff pleaded guilty, he is in a prison in North Carolina serving a 150 year prison sentence. The government says that there were suspicions within JPMorgan about what was happening and that when this happens, under the Bank Secrecy Act, the bank is supposed to file a suspicious activity report. It filed one with regulators in the U.K. but it didn't do so in the United States. It failed to warn the government about what was happening - this is what regulators contend and as a result, Madoff was able to get away with this for a lot longer than he would have otherwise.
MONTAGNE: So explain for us the charges that JPMorgan is facing now.
ZARROLI: Well, it faces two criminal charges under the Bank Secrecy Act but an important thing here is there will be deferred prosecution. If the bank reforms it's money laundering procedures and it pays investors, you know, the $1.7 billion - the government, you know, isn't promising, but the implication is that it will not pursue the case any further. This is the largest ever criminal forfeiture by a bank in a case like this and there could be more money, more fines, there's going to be a press conference this afternoon. The Office of the Comptroller of the Currency and the Treasury Department Office that deals with money laundering could add fines of their own.
MONTAGNE: Has JPMorgan reacted yet to this?
ZARROLI: Well, a spokesman for the bank has said today that yes, the bank could have done a better job of pulling together the pieces of information and the concerns that were being expressed about Madoff within the bank. But the spokesman also said that no employees willingly assisted Madoff, they just had suspicions - they didn't follow-through on them - but they didn't do it on purpose, in other words. This has been a really rough year for JPMorgan Chase, the past year it has paid billions of dollars in settlement for much of it stemming from the financial crisis for different incidents. The biggest of course was in November when it paid more than $13 billion over mortgage abuses but it also paid fines for energy market manipulation and the London whale trading fiasco. And in each case, the bank has just decided to pay the fines and move on - try to put it all behind - and also, when necessary, it has promised to implement the reforms that the government asks for.
MONTAGNE: Thanks very much, Jim.
ZARROLI: You're welcome.
MONTAGNE: NPR's Jim Zarroli.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.