“On October 28, 2008, less than two months before Bernard Madoff would confess to his decades-long Ponzi scheme, JPMorgan sent a suspicious activity report to the United Kingdom’s Serious Organized Crime Agency (SOCA). The document reads: JPMorgan’s “concerns around Madoff Securities are based (1) on the investment performance achieved by its funds which is so consistently and significantly ahead of its peers, year-on-year, even in the prevailing market conditions, . . .” – P Marten & R Martens
On January 6 of this year, JPMorgan Chase entered into a two-year probation agreement known as a “deferred prosecution” agreement with the U.S. Justice Department. The deal allowed JPMorgan to avoid prosecution for two felony counts related to its failures in serving as Bernard Madoff’s bank as tens of billions of dollars were laundered between accounts while it made none of the required suspicious activity reports – except one to the United Kingdom.
The deferred prosecution agreement, signed on January 6, 2014, required that for the next two years, JPMorgan had to bring to the attention of Federal prosecutors any knowledge of wrongdoing inside the bank, cooperate fully and in good faith, and agree to “commit no crimes under the federal laws of the United States subsequent to the execution of this agreement…” If JPMorgan broke its end of the bargain, it could not only be prosecuted for new crimes but for the Madoff deferred felony counts as well.
When JPMorgan filed its quarterly report with the SEC on Monday, known as the 10Q, it owned up to the following:
“DOJ is conducting a criminal investigation, and various regulatory and civil enforcement authorities, including U.S. banking regulators, the Commodity Futures Trading Commission (‘CFTC’), the U.K. Financial Conduct Authority (the ‘FCA’) and other foreign government authorities, are conducting civil investigations, regarding the Firm’s foreign exchange (‘FX’) trading business. These investigations are focused on the Firm’s spot FX trading activities as well as controls applicable to those activities. The Firm continues to cooperate with these investigations and is currently engaged in discussions with DOJ, and various regulatory and civil enforcement authorities, about resolving their respective investigations with respect to the Firm. There is no assurance that such discussions will result in settlements.” Continue reading