Guess Which Fortune 500 Company Knew About Madoff’s Ponzi Scheme Eighteen Months Before the Rest of Us?


According to internal documents just made public in a lawsuit, on June 15, 2007, a high-level risk-management officer at JPMorgan Chase sent a lunchtime e-mail to colleagues saying that another bank executive “just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme.” But even as far back as February 2006, a Chase risk analyst told his superiors that the securities in Madoff’s returns did not make sense. Another top banking executive consistently steered clients away from investments linked to Madoff’s since the “Oz-like signals” were “too difficult to ignore.” Although the bank had withdrawn all but $35 million of the $276 million it had invested in Madoff-linked hedge funds, it still allowed Bernie Madoff to move billions in and out of his Chase accounts until the day he was arrested. We see the problem. Maybe the financial world didn’t realize that “If you see something, say something” also applied to terrorizing Ponzi schemers. Next time, if you suspect investors are about to be looted of $50 billion, feel free to apply the 30 Rock version, “If you suspect anything, do everything.”

JPMorgan Hid Doubts on Madoff, Documents Suggest [NYT]