According to documents published by ABC News, JPMorgan Chase had an inkling that Bernie Madoff’s returns might’ve been “too good to be true” before the SEC cracked down on the Ponzi schemer. Such a revelation could prove material in Madoff trustee Irving Picard’s $6.4 billion lawsuit against the bank, alleging complicity in Madoff’s shenanegans.
The bank apparently sent a note to UK regulators to inform them of their suspicions but did not extend the same courtesy to their American brethren. From JPMorgan’s report to the Serious Organized Crime Agency:
JPMCB’s concerns around Madoff Securities are based (1) on the investment performance achieved by its funds which is so consistently and significantly ahead of its peers year-on-year, even in the prevailing market conditions, as to appear too good to be true – meaning that it probably is; and (s) the lack of transparency around Madoff Securities trading techniques, the implementation of its investment strategy, and the identity of its OTC option counterparties; and (3) its unwillingness to provide helpful information. As a result JPMCB has sent out redemption notices in respect of one fund, and is preparing similar notices for two more funds.
Hard to figure out how this plays well for JPMorgan.
mtaylor [at] observer.com | @mbrookstaylor