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JPMorgan pays $1.7 billion fine

By David McMillin · Bankrate.com
Tuesday, January 7, 2014
Posted: 3 pm ET

It's a new year, but JPMorgan Chase & Co. is dealing with the same old problems.

The banking giant has admitted wrongdoing and agreed to pay a $1.7 billion fine for its involvement with Bernard L. Madoff Investment Securities, the front for the massive Ponzi scheme that defrauded investors of an estimated $65 billion. The settlement will allow Chase to escape any criminal charges for failing to catch signals of fraudulent investing practices.

Supporting documents from the U.S. Department of Justice show that "the Madoff Ponzi scheme was conducted almost exclusively through a demand deposit account and other linked cash and brokerage accounts" at Chase for more than 20 years. While Ponzi schemes have played tricks on plenty of unassuming investors, banks should be another story. The Bank Secrecy Act requires financial institutions to assist government agencies in preventing money laundering. In Chase's case, it's clear that the bank failed to follow the BSA's guidelines.

In addition to the fine, the settlement includes a two-year deferral of prosecution agreement. Over the next two years, the bank must improve its efforts to comply with the BSA. Regulators will review quarterly reports of these efforts and will have access to the bank's nonprivileged books, correspondence, files and other documents. If regulators are satisfied at the end of the term, they will seek dismissal of all related charges.

While it's a massive fine, there will be plenty of critics who continue to be frustrated by the fact that no banking executives will personally pay for the oversight failure.

What do you think? Is a big fine enough, or does the Department of Justice need to seek criminal charges in a case like this?

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18 Comments
Burton
January 30, 2014 at 11:52 am

I'm trying to build up my credit now so I can refinance my mortgage through my bank. Chase is just ridiculous.

bob jordan
January 08, 2014 at 5:17 pm

Let's see...I think we as citizens,taxpayers and the "prey" of these, "to large to fail", shall we call them institutions should just simply do the math. Now $1.7 Billion. And the COST to the victims...$65 Billion Hum just over 1% AGAIN!! Wow now that "IS A DEAL"...AGAIN!!

JJ
January 08, 2014 at 12:32 pm

Soon as a get my truck paid off thru Chase I am history with them. Nothing but a bunch of money grubbers who only care about themselves and shareholders. Plus you know of these fines they have paid will be past on to their customers...corporate America stinks.

Jim Thompson
January 08, 2014 at 12:29 pm

It is amazing to me that a company can do these things and without human intervention. Where are the names? Why no followup by the press or government enforcement division? Never mind I know the answer. It is money and power. Sad.

Roy F. Dvorak
January 08, 2014 at 12:01 pm

How does the financial institution, or corporation for that matter, pay this fine to the government? Is the fine paid in one lump sum, or is the fine paid out via installments of X dollars over a given time period?

Scott Brown
January 08, 2014 at 11:54 am

Until instiitutions like JP Morgan are forced to pay full restitution of all monies that were stolen are the banks ever going to stop this practice. If it means the closure of the entire financial institution, then let it be. To repay a fraction of the profits JP made makes them the winner and they walk away with honest people's investments. Where is the justice?

Sally
January 08, 2014 at 11:48 am

Rather than a big fine to be paid to the government, why not make Chase reimburse the people who were defrauded? They are the ones who lost the money in the first place...why should the government get it?

Michael J. Hopkins
January 08, 2014 at 11:04 am

Not one of the aforementioned comments is appropriate. Each and everyone of you (through written verbatim of all things), has demonstrated that you are (all) devoid of any kind Formal Economics educations, nor have any practical prowess of the Banking industry. It is absolutely astonishing that such piffle can be put in print (or on-line) from such imbeciles. Please, (all of you), make your own effort to properly educate yourselves in these matters or you might otherwise present yourselves as absolute fools,

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