JP Morgan settles Madoff lawsuit for $218 million

Posted on: February 13th, 2014 by Steve Larson
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JP Morgan will pay $218 million to settle a putative class action brought by investors who lost millions in the Bernard Madoff scandal, according to a settlement preliminarily approved by a New York federal judge.  U.S. District Judge Colleen McMahon granted preliminary approval to the deal, which is part of a package of separately negotiated deals to repay the victims of Madoff’s Ponzi scheme. The consolidated class action initially wanted JPMorgan to pay $19 billion, claiming the bank was partially responsible for allowing the scheme to go on for so long.

In the deals, JPMorgan will pay $218 million to settle the class action, $325 million to settle a Security Investor Protection Act trustee’s avoidance action and $1.7 billion in civil forfeiture as part of a resolution with the U.S. attorney in the Southern District of New York.

In the class action, investors Paul Shapiro and Steven and Leyla Hill filed suits that were later consolidated alleging JP Morgan — Madoff’s bank for 20 years — was complicit in hiding Madoff’s scheme because it ignored evidence showing that money was moving between Madoff and his investors and not to his purported investment schemes.

The case is Shapiro et al. v. JPMorgan Chase & Co. et al., case number 2:11-cv-08331, in the U.S. District Court for the Southern District of New York.