If you have been following the news these past few days you will have seen that JP Morgan is to pay a further $1.7 billion in fines under a deferred criminal prosecution agreement.
JP Morgan’s problem this time is for failing to catch Bernie Madoff’s Ponzi scheme as it managed his accounts. It wasn’t that Madoff was smarter than the bank – there were dozens of warning signs or “red flags”. The bank folk involved just didn’t take heed of what was before their eyes.
The bank has had to admit that it didn't have the risk management systems in place to catch Madoff and implement them. For the bank’s management this case is a catastrophe worse than the London Whale.
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