Compliance December 3, 2010

JPMorgan Chase Sued over Madoff Fraud

The trustee charged with liquidating Bernard Madoff's investment firm has brought a $6.4 billion suit against JPMorgan Chase.
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The New York Law Journal reports the complaint accuses the bank, which served as Bernard L. Madoff Investment Securities LLC’s primary banker for more than 20 years, of continuing to profit from Madoff’s massive Ponzi scheme in spite of having suspicions about the legitimacy of his firm.   

David J. Sheehan of Baker & Hostetler, who represents trustee Irving H. Picard, said JPMorgan Chase was “willfully blind to the fraud, even after learning about numerous red flags” and that Madoff could not have pulled off his scheme without the bank. “JPMC should pay the price for its central role in enabling Madoff’s fraud,” he said in a press release, according to the Law Journal report.   

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JPMorgan responded by accusing Picard of “blatantly distorting” the bank’s role. In a statement, JPMorgan denied having any suspicions about Madoff, and said it followed all commercial banking regulations in its dealings with him.   

“The complaint filed today by the trustee for the Madoff estate blatantly distorts both the facts and the law in an attempt to grab headlines,” the statement said, according to the news report. “Any suggestion that JPMorgan supported Madoff’s fraud is utterly baseless and demonstrably false.”

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