September 17, 2013

The outrageous List of JP Morgan Crimes and Settlements

September 17, 2013. New York. Media outlets are already reporting the latest legal settlement with JP Morgan Chase over its many recent unethical or criminal scams. This time, the near-billion dollar fine is over the bank’s multi-billion dollar London Whale loss and illegal cover-up. And as each new settlement is added to the list, JP Morgan becomes the poster child for too big to fail, too big to jail.

Admission of wrongdoing and the London Whale

Media outlets like the New York Times are reporting this morning that JP Morgan Chase is only days away from a massive multi-country settlement over its criminal activity related the bank’s recent ‘London Whale’ scandal. And while the reported $750 million fine is only a drop in the bucket compared to the $6 billion loss to investors, for the first time the bank is allegedly being forced to admit some kind of wrongdoing to settle the case with US and UK regulators.

If that admission turns out to be the case once the settlement is finalized, it would be nearly unprecedented. More than five years after the global economic collapse at the hands of a half dozen US and European banks, not a single bank manager or executive has been convicted and jailed. Now, after hundreds of legal settlements that have all let the criminal offenders off scot free, government officials may finally be treating the banking crimes as most Americans complain they should have all along.

In the particular instance of the London Whale scandal, in addition to the $750 million reported fine, two bank employees have been charged with criminal activity. Their accused crimes include falsifying bank records and regulatory filings to cover up a massive investment loss their department was incurring. A JP Morgan Chase office in London was betting on credit derivatives and losing badly, to the tune of $6 billion. Their government and company filings however, overstated the value of their assets, giving the appearance of a much smaller loss.

Three criminals, two indictments, the Whale makes a deal

In separate reports yesterday, government officials announced criminal indictments against two of the three accused JP Morgan London traders. Both however have already fled the UK and are sitting safely in France and Spain where they are not expected to be extradited. JP Morgan trader Julien Grout has fled to his native France. While his manager, Javier Martin-Artajo, was in his native Spain at the time of the indictment. For his part, Martin-Artajo turned himself into Spanish authorities but was immediately released.

As is all too typical these days, the man nicknamed the London Whale himself was allowed to escape charges in exchange for testifying against his two indicted co-workers.  Even before the massive loss and criminal charges were announced, JP Morgan trader Bruno Iksil had the nickname due to his gigantic wagers and gambles. If the actual criminal charges are as reported, it would mean that the SEC believes that no one outside those three individuals in the London office were aware of or a part of the fraud and criminal activity.

List of JP Morgan scandals

The indictments and soon to be unsealed settlement with JP Morgan Chase over the London Whale crimes are only the most recent scandal to tarnish the already dirty reputation of one of the world’s largest banks. Prior to being edited out this morning and republished, the New York Times article linked above included a laundry list of crimes, violations, charges and settlements the bank has been a part of just over the last few years. That has seemingly lead to additional scrutiny by the world’s regulators.

The Times writes, ‘JP Morgan faces inquiries from at least seven federal agencies and two European nations. The authorities have cast a wide net, examining everything from the bank’s hiring practices in China to mortgage loans it sold to investors in the financial crisis.’ The account also says that the FBI is still investigating the bank over its connections to the biggest fraud in US history – Bernie Madoff. In response to that accusation, a JP Morgan statement insists, “The personnel who dealt with the Madoff issue acted in good faith in seeking to comply with all anti-money-laundering and regulatory obligations.”

Another recent case of accused criminal activity is this year’s report that JP Morgan repeated the same crimes Enron perpetrated 20 years ago, and upon the same misfortunate victims. In California, as well as Michigan, the bank is accused of cornering the electricity market and withholding power to force a spike in prices. That resulted in a windfall of additional profits for the bank and power provider. JP Morgan agreed to a $410 million settlement in July, but a criminal investigation is still underway. Read the Whiteout Press article, ‘Goldman Sachs and JP Morgan repeating Enron crimes’ for more information.

The Times also reports that JP Morgan Chase is under investigation for selling near-worthless mortgage-backed securities to taxpayer-owned Fannie Mae and Freddie Mac. The account also says the bank is on the verge of settling a case against it for the illegal practices it enlisted to collect overdue monthly credit card payments from its customers. It is also being investigated for selling credit card protection to customers while misleading them as to the level of protection the bank actually provided.

The bank was also recently forced to pay a reported $500-$600 million fine for manipulating the commodities market. It’s been a common practice lately for banks like JP Morgan and Goldman Sachs to corner the market on something, anything, and then cut off supply to the world and watch the price skyrocket. That practice, commonly known as cornering the market, used to be illegal. It’s a gray area as to whether or not it still is any longer.

Earlier this year, The Daily Beast published a then-current list of some of JP Morgan’s most recent civil and criminal settlements. They include:

2011

-JP Morgan was foreclosing on the wrong homes and evicting innocent families. Only US military personnel were compensated in the $56 million settlement.

-A $153 million fine was levied against the bank for selling investments to its customers that the bank had invested against.

-The bank paid a $229 million fine for rigging the state municipal bond bidding market, defrauding the taxpayers in 31 states.

-JP Morgan was caught doing business with embargoed countries like Iran, Sudan, Cuba and Liberia. The bank paid an $88 million fine.

2012

-JP Morgan was hit with a $5 billion penalty for years worth of what the suit called, “shoddy loan servicing, illegal robo-signing, and faulty foreclosure processing.”

-The bank paid a $110 million fine for what is commonly known as ‘check sequencing’. Rather than process their customers’ debits and credits based on their chronological order, the bank went days back into the past to re-sequence the transactions in whichever order would make the account holder run out of money fastest so the remaining debits would bounce and the bank could charge multiple insufficient funds and overdraft fees.

-JP Morgan refunded $150 million to investors, mainly pension funds, that lost large amounts of money invested with the bank during the 2008 and 2009 economic crash.

-The bank agreed to a $296.9 million settlement with the SEC for what many consider the cause of the US housing collapse and the resulting economic collapse – misleading investors about the near-worthless value of the mortgage-backed securities JP Morgan was creating and selling.

2013

-Ten banks, including JP Morgan Chase, were forced to repay a combined $8.5 billion to defrauded and wrongfully foreclosed homeowners.

-JP Morgan was forced to repay $546 million to customers of MF Global after the chaotic days of its criminal collapse. MF Global CEO and former NJ Governor Jon Corzine had reportedly raided the accounts of its customers in the hours prior to its implosion to pay the firm’s debts to banks like JP Morgan.

That concluded the extensive list from The Daily Beast published back in May. But as readers have seen in the months since, JP Morgan’s criminal and civil investigations and settlements haven’t stopped there. And when the London Whale settlement is unsealed in the coming days, it certainly won’t be the last.

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