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JPMorgan Pays for Shorting Madoff Without Telling Anyone

bloomberg.com

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Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#4

Post by andr3w321 »

refurb wrote: post #3
colinbartlett wrote: post #2

JPMorgan "Pays" but barely. $1.7 billion is nothing out of $100 billion in annual revenue and $2.5 trillion in assets.

Did you read the article? The basically got fined for not doing the SEC's job.

With the know your customer laws http://en.wikipedia.org/wiki/Know_your_customer it's increasingly the bank's responsibility to do the job of regulators. This is not new. It might be dumb, but it's how the system works(or doesn't work) right now.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#5

Post by this_user »

colinbartlett wrote: post #2

JPMorgan "Pays" but barely. $1.7 billion is nothing out of $100 billion in annual revenue and $2.5 trillion in assets.

Revenue is not income. $1.7 bn is a non-trivial amount even for them. Add to that the $13 bn they had to pay on fraudulent mortgage-bonds some weeks ago and things are starting to sum up.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#6

Post by refurb »

andr3w321 wrote: post #4
refurb wrote: post #3

Earlier quoted context omitted.

Did you read the article? The basically got fined for not doing the SEC's job.

With the know your customer laws http://en.wikipedia.org/wiki/Know_your_customer it's increasingly the bank's responsibility to do the job of regulators. This is not new. It might be dumb, but it's how the system works(or doesn't work) right now.

I don't disagree that JPM has a responsibility to share any information they may have about financial fraud. I guess my point is that yeah, the $1.7B fine isn't much to JPM, but at the same time, it seems inline with their degree of negligence.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#7

Post by pfraze »

this_user wrote: post #5
colinbartlett wrote: post #2

JPMorgan "Pays" but barely. $1.7 billion is nothing out of $100 billion in annual revenue and $2.5 trillion in assets.

Revenue is not income. $1.7 bn is a non-trivial amount even for them. Add to that the $13 bn they had to pay on fraudulent mortgage-bonds some weeks ago and things are starting to sum up.

Wasn't like 7 bn of that tax-deductible?

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#8

Post by rayiner »

Nice summary of the situation. This is the takeaway for me:

"If you think of JPMorgan's businesses as operating more or less independently, but occasionally making each other money by cross-selling, then this mess makes more sense. A London investment bank that considered and rejected a derivative-linked investment in Madoff would have no obligations to report its suspicions to U.S. regulators. A boring custody bank that ran Madoff's checking accounts but had no derivatives traders to get suspicious about him also probably wouldn't be in trouble for missing the Madoff red flags. Combine the two businesses and the same behavior gets you in trouble."

Also, quite refreshing to read an article by someone who apparently has some experience with Wall Street. On a related note: I've been really happy with Bloomberg's coverage recently, of Wall Street specifically and the business world generally. Especially now what WSJ has decided to go full-on partisan.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#9

Post by spinlock »

andr3w321 wrote: post #4
refurb wrote: post #3

Earlier quoted context omitted.

Did you read the article? The basically got fined for not doing the SEC's job.

With the know your customer laws http://en.wikipedia.org/wiki/Know_your_customer it's increasingly the bank's responsibility to do the job of regulators. This is not new. It might be dumb, but it's how the system works(or doesn't work) right now.

KYC is about not doing business with terrorists or other undesirables. Madoff was not one of those. He was running a ponzi scheme but was otherwise an upstanding citizen. No bank would have any reason not to do business with him due to KYC due diligence.
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