JPMorgan to pay US$2.6b over Madoff allegations

[MANHATTAN] JPMorgan Chase & Co will pay US$2.6 billion to resolve criminal and civil allegations it failed to stop Bernard Madoff's Ponzi scheme, bringing its legal settlements from the past two years to more than US$29 billion and further eroding its once-record earnings.

JPMorgan avoided prosecution by acknowledging in an accord with the US that it ignored red flags for about 15 years that Madoff used his account to run a fraud, Manhattan US Attorney Preet Bharara said. The bank will pay US$1.7 billion to settle the government's charges, US$350 million in a related case by the Office of the Comptroller of the Currency and US$543 million to cover private claims, the firm said in a filing.

The company "failed miserably" in its responsibility as a financial firm, Mr Bharara said on Tuesday at a press conference. "The bank connected the dots when it came to its own profits but not when it came to its own legal obligations…