JP Morgan Chase Not Likely to Forget $543 Million Settlement

JP Morgan Chase was sued by thousands who accused Chase of ignoring signs of wrongdoing in the Bernie Madoff Ponzi scheme to benefit financially from the con man’s business.

A New York bankruptcy court judge settled the $543 million lawsuit in favor off the plaintiffs who said that the negligence alleged the bank helped perpetuate Madoff’s scam for years by ignoring signs of fraud.

To date, financial recovery for Madoff victims is $10 billion, or 59 percent of the $17 billion in principal lost by customers in Madoff’s investment advisory business. Efforts by  federal investigators and a trustee have resulted in a total recovery for victims of almost $14 billion, or 82 percent of the lost principal.

Meanwhile, 200 additional Madoff victims are intending to file a suit against JP Morgan Chase. While this group of victims actually received revenue from Madoff they are suing the bank.

Madoff is 75 years old but in 2009 began serving a 150-year sentence for a Ponzi scheme that took money from investors to pay off new investors, but was never actually invested as promised.

But Wait, There’s $615 Million More Due from JP Morgan Chase

As if $543 million in lawsuit debt wasn’t enough, JP Morgan Chase, agreed to settle claims it improperly approved Federal Housing Administration (FHA) and Veterans Affairs (VA) loans ineligible for insurance because the didn’t meet underwriting requirements

The Associate Attorney General said this settlement “recovers wrongfully claimed funds for vital government programs that gives millions of Americans the opportunity to own a home and sends a clear message that we will take appropriately aggressive action against financial institutions that knowingly engage in improper mortgage lending practices.” 

This suit was settled one year later from its January 2013 filing date. It was recently unsealed the first week of February 2014 after being originated under the False Claims Act by whistleblower Keith Edwards.

In this case, JP Morgan Chase admits that it violated the False Claims Act and failed to inform the VA and FHA when its own internal reviews discovered more than 500 defective loans that shouldn’t have been submitted for insurance, but was submitted, regardless of the discovery. The bank said that its settlement demonstrates an effort to put “historical mortgage related claims behind.” 

JP Morgan Chase’s Bear Stearns Unit Lawsuit Dismissed

Meanwhile, within weeks of the above mentioned settlements, JP Morgan Chase’s Bear Stearns unit was accused of misleading investors by lending faulty mortgage-backed loans and securities to SRM Global.

The lawsuit was said to be unsound and a delay on the part of SRM Global showed them incapable of proving their case.

SRM Global tried but failed to show any proof  that though the financial health of this mortgage lender was not sound, the investors were kept in the dark. This led to more than $200 million loss for SRM Global.

As an aside: JPMorgan has already entered into a nationwide settlement wherein it agreed to pay $275 million in cash to shareholders of Bear Stearns to compensate for its losses incurred.

One Day After Appointment, JP Morgan Chase Exec Steps Down

Blythe Masters, head of the JP Morgan Chase Commodity Future Trading unit, the largest commodity trading operation on Wall Street, stepped down from an appointment on a commodity futures trading commission (CFTC)advisory board.

Bloomberg cited two sources as saying the position was offered to Masters who then decided to withdraw. Bloomberg said Masters’ name has been removed from the list of committee members on the website of CFTC. She was invited to join the advisory panel by acting Chairman Mark Wetjen, according to one of the sources.

The global markets committee of the CFTC is composed of industry executives whose main role is to enact rules as required by the 2010 Dodd-Frank Act and avoid a repeat of the 2008 credit and financial crisis.

The Dodd-Frank Act is supposed to create transparency in the market and minimize risk in global markets. Wall Street watchdogs questioned whether state-backed lenders should be involved in financial markets at all. 

Masters’ commodities unit was involved in a $410 million settlement with the US Federal Energy Regulatory Commission over power markets manipulation. The federal agency will receive the funds from the Wall Street bank unit.

Group Decries $13 Billion 2013 Bank Settlement Saying It Lets Banks Off the Hook

In 2013, several large lenders were ordered to pay $13 billion in fines issued by the U.S. Justice Department in a deal that watchdog group Better Markets alleges was unfair to taxpayers.

Better Markets, a watchdog group that is fighting to ensure that financial reform is upheld, claims in the lawsuit that the Federal Government brokered a deal with banks that basically lets them off of the financial crisis with a slap on the wrist.

Banks including JP Morgan Chase, Wells Fargo, Bank of America, Goldman Sachs and others were fined for their roles in the U.S. financial crisis. Better Markets is asking the court to void the agreement and to bar the Justice Department from enforcing the agreement with JP Morgan until the deal has withstood independent judicial review. 

Better Markets is saying that the settlements, that came after banks sold bad loans, which lost value, forcing JP Morgan Chase, Bank of America, Wells Fargo and others to have to borrow from the government, did not go through the courts. The group is saying that the Justice Department forced a settlement onto the banks, and thus, on all taxpayers.

The Department of Justice settlement didn’t follow the standard court filings because settlement was never filed in federal court but yet was publicly released. There was also a complaint that had been prepared to file against JPMorgan before it negotiated the deal that was never released.

Bank Lawsuits Continue to Demonstrate Questionable Behavior

Reading about the  lawsuits filed against the big six lenders: JP Morgan Chase, Wells Fargo, Bank of America, Goldman Sachs and Citigroup informs and demonstrates that there are less than honest actions that have taken place in the financial industry. 

If you have found that there are discrepancies, problems, challenges or false or incorrect information or paperwork on your mortgage refinance, your mortgage, or in a foreclosure action, that you feel should be reviewed, consult with an experienced real estate, financial and contracts attorney.