JPMorgan Chase just agreed to pay $1.7 billion as part of a settlement with the federal government. JP Morgan Chase had been initially charged under the Bank Secrecy Act with failing to maintain an effective anti-money laundering program and failing to file a suspicious activity report when it detected a suspicious transaction related to either a money laundering activity or a violation of the Bank Secrecy Act. The January 6, 2014 settlement includes resolution of criminal and civil charges related to the bank's alleged failure to act against Bernard L. Madoff's Ponzi scheme. The $1.7 billion will be divided among Madoff's victims and the United States Treasury Department's Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network.
This settlement is marked by a deferred prosecution agreement, which is a pact between a party and the federal government in which the government agrees to forego prosecution in exchange for the party's agreement to comply with certain operational guidelines, pay penalties, and assist the government in related or subsequent investigations. In this case, JP Morgan Chase agreed to improve its anti-money laundering practices, report suspicious and potentially fraudulent practices, and cooperate fully with federal investigators in their pursuit of information relating to the Madoff fraud incident.
Preet Bharara, the United States attorney in Manhattan with whose office JPMorgan Chase entered into the settlement, stated in July 2013, "I don't think anyone is too big to indict, no one is too big to jail." During that July 2013 lecture at the Delivering Alpha conference presented by CNBC and Institutional Investor, Bharara promised that for repeat offenders, his office would not simply seek fines, but instead would prosecute criminal behavior. Seeking fines instead of actually prosecuting these repeat offenders, he claimed, would be ineffective at punishing the wrongdoing -- the company just wouldn't "get the message."
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s the investigation that is the subject of this deferred prosecution agreement a first-time offense for JPMorgan Chase? Not quite. JPMorgan Chase recently agreed to pay a record multi-billion dollar penalty to the federal government for its sale of troubled mortgage securities prior to the financial crisis. The bank is also currently facing criminal investigations related to its energy trading practices. JPMorgan Chase can hardly be considered a ‘first-time offender.'
What, then, is the message that the federal government is sending to JPMorgan Chase? And, if no one is truly ‘too big' to criminally prosecute, when will the government actually do so?
This settlement is marked by a deferred prosecution agreement, which is a pact between a party and the federal government in which the government agrees to forego prosecution in exchange for the party's agreement to comply with certain operational guidelines, pay penalties, and assist the government in related or subsequent investigations. In this case, JP Morgan Chase agreed to improve its anti-money laundering practices, report suspicious and potentially fraudulent practices, and cooperate fully with federal investigators in their pursuit of information relating to the Madoff fraud incident.
Preet Bharara, the United States attorney in Manhattan with whose office JPMorgan Chase entered into the settlement, stated in July 2013, "I don't think anyone is too big to indict, no one is too big to jail." During that July 2013 lecture at the Delivering Alpha conference presented by CNBC and Institutional Investor, Bharara promised that for repeat offenders, his office would not simply seek fines, but instead would prosecute criminal behavior. Seeking fines instead of actually prosecuting these repeat offenders, he claimed, would be ineffective at punishing the wrongdoing -- the company just wouldn't "get the message."
I
s the investigation that is the subject of this deferred prosecution agreement a first-time offense for JPMorgan Chase? Not quite. JPMorgan Chase recently agreed to pay a record multi-billion dollar penalty to the federal government for its sale of troubled mortgage securities prior to the financial crisis. The bank is also currently facing criminal investigations related to its energy trading practices. JPMorgan Chase can hardly be considered a ‘first-time offender.'
What, then, is the message that the federal government is sending to JPMorgan Chase? And, if no one is truly ‘too big' to criminally prosecute, when will the government actually do so?
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