• 09 Dec 2013 at 4:26 PM
  • Banks

JPMorgan Legal Liabilities: An Update

In honor of the five-year anniversary of the Fall of the House of Madoff (Wednesday, if it’s not already a fixture in your Outlook calendar), we bring you an update on the House of Morgan’s latest negotiations with a representative of the U.S. government, this time over whether it should have filed a form that probably would have been ignored or ineptly investigated anyway, in which it would have suggested that maybe something was amiss on the 17th floor of 885 Third.

Manhattan U.S. Attorney Preet Bharara’s office is examining why J.P. Morgan didn’t provide U.S. regulators with a formal “suspicious activity report” raising concerns about Mr. Madoff—despite having done so with a U.K. agency more than a month before Mr. Madoff’s arrest, said the people close to the probe. Mr. Madoff had a two-decade-long banking relationship with J.P. Morgan before his arrest in December 2008.

J.P. Morgan is negotiating a settlement with the U.S. attorney’s office that will likely include a deferred-prosecution agreement and a fine relating to alleged inadequate warnings about Mr. Madoff, these people said. Prosecutors and the Federal Bureau of Investigation have been looking for a larger pattern of control failures inside J.P. Morgan and examining whether the bank allegedly failed to alert regulators despite numerous red flags, said the people close to the case.

It is possible a deferred-prosecution agreement with the U.S. attorney’s office could be announced in the coming weeks, although that date also could slide to the beginning of 2014, these people added.

And once that’s squared away, JPMC’s growing compliance and legal teams can get to work dealing with this developing disaster.

A J.P. Morgan Chase & Co. investigation of its overseas hiring has found emails suggesting a link between a decision to hire the son of China Everbright Group chairman Tang Shuangning and the bank’s pursuit of business from that state-backed conglomerate, according to a person familiar with the messages.

Investigators are looking for violations of the U.S. Foreign Corrupt Practices Act, a 1977 law that bars U.S.-based or U.S.-listed companies from giving money or other items of value to foreign officials to win business. They must find clear evidence linking the recruitment of an employee to winning a new contract or generating increased revenue, according to legal experts.

J.P. Morgan Is in Talks With U.S. Over Madoff Warnings [WSJ]
J.P. Morgan Emails Note Hire’s Family Ties [WSJ]

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  1. Posted by Enough Already | December 9, 2013 at 5:28 PM

    What next – a federal investigation into JPM employees' unpaid parking tickets?

  2. Posted by Marissa | January 21, 2014 at 9:28 PM

    On top of that, the government is investigating JPMorgan’s role in Bernie Madoff’s Ponzi scheme. The only thing more toxic than an affiliation with the 2008 financial crisis is Madoff.
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