JP Morgan Suspected Madoff Months Prior to Arrest, Kept Doing Business With Him

Source: ABC News

Document: Bank Thought Profits Were Probably 'Too Good To Be True'

Documents obtained by ABC News show that two months before Bernie Madoff's arrest JP Morgan Chase suspected that his investment returns were probably "too good to be true." The bank, however, was still doing business with Madoff when federal authorities discovered his Ponzi scheme.

Lawyers representing the victims of Madoff's massive investment fraud filed a $6.4 billion lawsuit against JP Morgan Chase Thursday, claiming the bank continued its relationship with Madoff despite having documented suspicions about him.

The lawyers' complaint remains sealed, and lawyers did not specify in a public statement on the lawsuit how JP Morgan had documented those suspicions, but ABC News has obtained a "Suspicious Activity Report" that the London office of JP Morgan Chase filed with the U.K.'s Serious Organized Crime Agency in October 2008, two months prior to Madoff's arrest, that specifically notes Madoff's investment returns were most likely "too good to be true."

The document shows that the company was already removing its money from funds that did business with Madoff – so-called "feeder funds" -- by the time it alerted the British government to its concerns. The London office did not issue a similar alert to U.S. authorities, and an Inspector General's Report from the U.S. Securities and Exchange Commission issued in the wake of Madoff's arrest did not mention any warnings from JP Morgan.

Read more: http://abcnews.go.com/Blotter/jp-morgan-suspected-madoff-months-prior-arrest/story?id=12294368

They believe they only have fidiciary responsbility for their own accounts.