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Authorities Close to Deal with JPMorgan Chase over Madoff Response

December 8, 2013
JPMorgan, madoff, us justice dept

U.S. authorities are considering deferred prosecution as a response to JPMorgan Chase's dealings with Bernard Madoff, the Wall Street Journal reported.

Citing sources it did not identify, the newspaper said Saturday the U.S. Justice Department is focused on the bank's failure to respond vigorously to warning signs that Madoff, now serving a 150-year sentence for investment fraud, was running his securities business illegally.

The law requires banks to alert authorities if they suspect a transaction of more than $5,000 involves money laundering or terrorist activity. A suspicious activities report, or SAR, is required if a bank "detect[s] certain known or suspected violations of federal law or suspicious transactions."

Madoff, who lost billions of dollars of his clients' money before his 2008 arrest, was a JPMorgan customer for 20 years.

A month before his arrest, JPMorgan filed a report with British authorities, warning them that Madoff's activities were suspicious, noting that his firm's returns on investments "appear too good to be true."

Sources said Justice Department could announce a deferred prosecution settlement with JPMorgan by the end of the year, that would involve JPMorgan paying a fine and agreeing to a document citing facts of the case, but having charges dismissed in the future if the firm maintains suitable changes over a period of time.

It was not clear why the bank did not file an SAR with U.S. authorities. About 1.6 million SAR reports were filed with the Justice Department in 2006.

JPMorgan alone files between 150,000 and 200,000 reports per year, the Journal said.

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Source: UPI Business News

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