In response to the $6.4 billion lawsuit filed by Irving Picard, the trustee for Bernie Madoff, JPMorgan Chase has stated that it had no legal obligation to discover Madoff was perpetrating a Ponzi scheme. The bank claims Picard is holding the bank to accountability standards not prescribed under the law. In addition to the purported non-existent standard to investigate clients, JPMorgan Chase is also challenging Picard’s standing to bring this lawsuit. The bank believes the lawsuit is essentially a class action litigation, which should be in federal district court to be heard by a jury, and not in bankruptcy court.
Picard has alleged in his lawsuit, seeking $1 billion in fees and another $5.4 billion in damages, that the bank knew there were problems with Madoff’s accounts. In support, Picard cites to emails and other documents where JPMorgan Chase employees expressed concerns over Madoff’s operation and its unusual performance given the performance of the market. Despite these red flags, the trustee maintains the bank willfully ignored the fraud.