JPMorgan Chase agrees to pay $1.7 billion to victims of Bernard Madoff fraud

Following a settlement with US prosecutors, JPMorgan Chase has agreed to pay $1.7 billion to victims of the Bernard Madoff fraud.

The settlement comes after Federal prosecutors accused the bank of ignoring red flags about Bernard Madoff’s crimes.

“We recognize we could have done a better job,” said JPMorgan spokesperson Jennifer Zuccarelli.

The bank has agreed to improve its controls as part of the settlement.

While JPMorgan acknowledged failures in its protections against money laundering, the settlement includes a so-called deferred prosecution agreement that allows it to avoid criminal charges.

No individual executives were accused of wrongdoing.

JPMorgan was Bernard Madoff’s primary bank in the later years of a fraud that lasted for decades.

The bank had a relationship with Bernard Madoff dating back to 1986, according to documents released by the US Attorney’s office.

It ended in 2008 when Bernard Madoff revealed to the FBI that his investment advisory business was a Ponzi scheme.

According to the complaint, Bernard Madoff’s account – account 703 – received deposits and transfers totaling $150 billion over the period from 1986 until the fraud was discovered in 2008, almost exclusively from Madoff Securities.

JPMorgan employees began raising red flags about the account from the late 1990s up until 2008, but no action was taken to alert US regulators.

Bernard Madoff, 75, pleaded guilty to the fraud and is currently serving a 150-year prison sentence in the US.

Over the past year, JPMorgan has paid close to $20 billion in settlements with regulators for various violations relating to the US financial crisis, the so-called “London whale” trading loss, and manipulating the London inter-bank offered rate, or LIBOR.

JPMorgan boss Jaime Dimon has taken a proactive stance in ridding the bank of various investigations into its practices over the past year.

In his annual letter to shareholders from April 2013, Jaime Dimon wrote: “I feel terrible that we let our regulators down.”

The bank is still facing scrutiny from US regulators over its hiring policies in China.

Shares in JPMorgan fell slightly on news of the settlement.