Madoff victims to get redress from JP Morgan

Tim Wallace
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JP MORGAN is braced for a $2bn (£1.2bn) settlement with the US authorities over allegations the bank failed to report its suspicions regarding the activities of fraudster Bernard Madoff.

Half of the payment is expected to go to Madoff’s creditors, five years to the week after his $20bn scam was exposed.

The remaining $1bn of the settlement would then go to the Department of Justice.

On top of that the bank may have to enter into a deferred prosecution agreement, the Financial Times reported, meaning the settlement would acknowledge criminal allegations but not prosecute the bank as long as it pays the fine.

The bank has denied any wrongdoing but is currently settling a series of cases which have been hanging over it for several years.

Earlier this year JP Morgan revealed it had set aside $23bn to cover a range of ongoing litigations, and warned investors they could reasonably expect an additional $5.7bn of legal costs on top of that.

Other cases include the $1bn the bank paid to the authorities over the London Whale derivatives trading losses – which themselves cost the bank $6bn – and a $13bn settlement covering mortgage market claims.

The Madoff settlement could come as soon as next week.

Madoff is in jail serving a 150-year sentence, while one son Andrew is serving a 10-year prison term and another Mark committed suicide three years ago.

JP Morgan and the Department of Justice declined to comment.