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JPMorgan Investor Sues Bank Over Bernard Madoff Accord

JPMorgan Chase & Co. was sued for lack of oversight by a shareholder over the bank’s $2.6 billion settlement of criminal and civil allegations that it failed to stop Bernard Madoff’s Ponzi scheme.

Investor Sam Wietschner accused the biggest U.S. bank by assets, chairman Jamie Dimon and the company’s board of breach of fiduciary duty and abuse of control, according to a complaint filed today in New York State Supreme Court in Manhattan.

JPMorgan avoided prosecution by entering into an accord this week with the office of Manhattan U.S. Attorney Preet Bharara that acknowledged oversight lapses related to a JPMorgan account Madoff used to fund its fraud.

Wietschner said there wasn’t one check or wire transfer to a clearing house, securities exchange or other entity in the 22-year history of Madoff’s account that may have been connected to the purchase of securities or any indication that the business was investing the money deposited by investors, according to the complaint.

Most of the money that came into the account from investors depositing additional funds went directly to other investors, in the form of redemptions, and the JPMorgan employee who was responsible for enforcing federal “know your customer” guidelines on the account for 10 years didn’t even know which business the account was for or its purpose, Wietschner alleged.

“The above transactions could not possibly have been linked to any legitimate business let alone securities investment business (since there were no investments in securities),” Wietschner said in a court filing.

Brian Marchiony, a spokesman for New York-based JPMorgan, declined to comment on the suit.

The case is Wietschner v. Dimon, 650079/2014, New York State Supreme Court, New York County (Manhattan).

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