JPMorgan's Madoff settlement is hardly justice

The bank was fined $1.7 billion for turning a blind eye, but still no executives have faced fraud charges


Natasha Lennard
January 7, 2014 10:40PM (UTC)

While I'm no fan of putting people in cages, the failure to bring to justice the architects and enablers of Wall Street fraud remains a rancorous fact. In a nation with the largest prison population and incarceration rate in the world, the pro forma punishment for fraud carried out by major banks is a nominal fine.

And once again this week, a punishment doled out to JPMorgan Chase has little to do with justice. When the bank had a chance to inform the federal authorities of Bernie Madoff's ponzi scheme, which stole billions from clients, it failed to do so. JPMorgan was thus found guilty of two felony counts under the Bank Secrecy Act, which enforces the reporting of suspicious activity. The bank will have to pay the $1.7 billion to Madoff's victims.

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The New York Times reported:

JPMorgan, having served as Mr. Madoff’s primary bank for more than two decades, had a unique window into his scheme. In a document outlining the bank’s wrongdoing, prosecutors argued that “the Madoff Ponzi scheme was conducted almost exclusively through” various accounts “held at JPMorgan.”

On two occasions, in 2007 and 2008, JPMorgan’s own computer system raised red flags about Mr. Madoff, according to prosecutors. But both times, prosecutors say, JPMorgan employees “closed the alerts.”

As Scott Martelle of TruthDig noted, regarding the settlement:

The silver lining is that some of the penalties will go to funds handling payouts to Madoff’s victims. But once again, a big bank, rather than facing the kind of everyday justice the government exacts from the poor and the powerless, will be able to wriggle its way out of responsibility for what the government believes was criminal behavior.


Natasha Lennard

Natasha Lennard is an assistant news editor at Salon, covering non-electoral politics, general news and rabble-rousing. Follow her on Twitter @natashalennard, email nlennard@salon.com.

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Related Topics ------------------------------------------

Bernie Madoff Fraud Jpmorgan Justice Ponzi Scheme Settlement Wall Street

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