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Compliance February 9, 2011
JPMorgan Responds to Madoff Trustee Suit
JPMorgan Chase & Co accused the trustee seeking $6.4 billion for
victims of Bernard Madoff's Ponzi scheme of exceeding his authority by
suing in bankruptcy court, where a judge, rather than a jury, would decide
the case.
Reported by Rebecca Moore
The bank wants the case moved to federal district court. Reuters reports that in its filing, JPMorgan said the case requires a “significant interpretation” of federal banking law, including the Bank Secrecy Act and USA Patriot Act, and a determination of whether Irving H. Picard has standing to sue, requiring an assessment of federal securities law.
“The trustee’s claims raise fundamental questions, of great importance to the banking industry as a whole, as to whether banks such as JPMorgan have liability to private plaintiffs for fraud conducted by their customers,” JPMorgan said, according to Reuters. “These issues fall outside the province of the bankruptcy court.”
Picard’s complaint seeks to recover nearly $1 billion in fees and profits and an additional $5.4 billion in damages. The complaint alleges that JPMC had a palpable concern that Madoff was a fraud for years, but it was not until October 2008 that it reported Madoff to government officials (see “Madoff Trustee Complaint against J.P. Morgan Unsealed“).
JPMorgan has said it did not know about or assist in Madoff’s fraud.
The case is Picard v. JPMorgan Chase & Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04932.