JP Morgan has agreed to pay out more than $2bn in penalties relating to ties with convicted fraudster Bernie Madoff’s Ponzi schemes.
The penalties are to settle charges that the bank knowingly ignored evidence that the schemes were too good to be true.
The bank had a twenty year partnership with Madoff until his arrest in 2008.
The $2bn figure includes a $1.7bn fine from the US attorney’s office for the southern district of New York, which lodged two charges against the bank for violations of the secrecy act.
JP Morgan will pay a further $350m to the US office of the comptroller to settle related issues.
According to the US attorney’s office, the $1.7bn fine is the “largest ever bank forfeiture and largest ever [Department of Justice] penalty for a Bank Secrecy Act violation.”
At a press conference in New York, Preet Bharara, the US attorney for the southern district of New York, said: “JP Morgan as an institution failed, and failed miserably.
“In part because of that failure, for decades Bernie Madoff was able to launder billions of dollars in Ponzi proceeds through a single set of accounts at JP Morgan.
“The bank connected the dots when it came to its own profits but was not so diligent when it came to its legal obligations,” Bharara added.
Madoff was arrested in December 2008 after his £20bn fraud came to light. He is currently serving a 150 year prison sentence.
In a 2011 interview with the Financial Times, Madoff predicted the bank’s fine over their shared history.
Madoff said: “JP Morgan doesn’t have a chance in hell of not coming up with a big settlement.
“There were people at the bank who knew what was going on.”
Shares in JP Morgan were down 1.3% at $58.26 in afternoon trading yesterday.
The bank has paid out fines totalling more than $28bn over the last three years.