JP Morgan To Settle Madoff Claim: Wall Street ‘Code of Silence’

News breaks this morning that JP Morgan, Bernie Madoff’s lead banker, is close to settling with the Feds under a seldom used deferred prosecution agreement.

What is that?
Think of it as the equivalent of:  You guys and gals had better behave yourselves going forward or we’re going to need to revisit this! Truth be told, a deferred prosecution agreement is tougher than the standard “neither admit nor deny” treatment accorded Wall Street banks. How so? It “lists the bank’s criminal violations in a court filing but stops short of an indictment as long as JP Morgan pays the penalties and acknowledges the facts of the government’s case.” Let’s revisit the Madoff trustee’s lawsuit brought against Morgan from early 2011. >>>>>>>>>>>>>>>>
We learn from that lawsuit that there were 21 causes of action against JPM, individually designated as: preferential transfers; fraudulent transfers (numerous counts); aiding and abetting a fraud; aiding and abetting a breach of fiduciary duty; conversion; unjust enrichment; fraud on the regulator. In reading through this document, it would appear to be a “How To” manual for the opening and ongoing management of a laundromat.
Yet given what appears to be a preponderance of material supporting criminal charges, the question remains: why didn’t anybody from within JP Morgan blow the whistle long, loud, and unceasingly in order to expose the Madoff scam?
Truth be told, we do not know that that did not happen. The Wall Street ‘code of silence’ in situations such as these is overpowering in putting the muzzle on those who might try to do the right thing. In point of fact, chapter 9 in my soon to be released book is entitled Code of Silence and details specific cases of individuals who did try to do the right thing and what happened to them. It’s not pretty.
Neither is the mess that the DOJ and the Madoff trustee are still trying to clean up from the Madoff scam.
We need a lot more than deferred prosecution agreements to make sure that scandalous situations such as Madoff never happen again. How might the cultural change on Wall Street to break this code of silence begin to gain a foothold?
Well, I do not want to give away my book right here. The book will be out on January 7th. I think we will still have these issues to address at that point.
Navigate accordingly.
Larry Doyle
Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.
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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.
This entry was posted on Thursday, December 12th, 2013 at 10:20 AM and is filed under Bernie Madoff, General, Jamie Dimon, JP Morgan, Madoff. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.