JPMorgan Chase & Co., the target of multiple U.S. Justice Department investigations, tentatively agreed to pay about $2 billion to resolve probes into whether it ignored warning signs about Bernard Madoff’s crimes, according to a person briefed on the matter.
The bank also assented to a deferred-prosecution agreement, said the person, who asked not to be identified because the negotiations are private. In such deals, the government agrees not to prosecute for a specified period and charges are dismissed if the entity improves its programs and complies with the law. The talks are in their final stages and the accord could be announced before year-end, the person said.
Chief Executive Officer Jamie Dimon, 57, is seeking to resolve government probes that have beset JPMorgan, the biggest U.S. bank, while overhauling internal controls to improve relations with regulators. Wall Street firms have spent years fighting off claims brought on behalf of Madoff’s victims, including accusations that the companies ignored the con man’s fraud to continue reaping fees.
The Office of Comptroller of the Currency, the bank’s primary regulator, and Manhattan U.S. Attorney Preet Bharara have been investigating how New York-based JPMorgan handled funds controlled by Madoff, whose multibillion-dollar fraud was the biggest Ponzi scheme in the nation’s history. James Margolin, a Bharara spokesman, and the FBI’s Peter Donald declined to comment.
The OCC, which sanctioned the lender in January for violating the Bank Secrecy Act, plans to punish the company for BSA violations related to Madoff, according to another person briefed on the probe. The OCC also is likely to fine the bank for additional anti-money laundering violations, the person said. Bryan Hubbard, an OCC spokesman, declined to comment.
The Justice Department is increasingly calling for corporate monitors in non- and deferred-prosecution agreements to review companies’ compliance with the terms of the agreements and to ensure corporate reform, according to a 2008 department memo on the topic. The corporate monitors are usually employed by the firms and approved by the government.
