Is it logical speculation or is conspiracy theory? Did JPM Chase remove all of their own cash (and not their client’s cash) out of Bernie Madoff’s accounts prior to the unraveling of his Ponzi scheme (with insider knowledge gained from their takeover of Bear Stearns)? Who is investigating this? …and if it is being investigated, will we ever get to know these answers? If true, will justice prevail or will an illusion of justice be painted?
Let’s face it folks, the same people that would investigate something like this, are the same people that need for this story to NOT BE TRUE! Yes, our government, whom is issuing debt at record levels does not want anything bad to happen at JPM Chase, because JPM Chase is at it’s core, the Government’s Bank. An insider trade of this magnitude could rock the foundation of the government’s most important bank, while at the same time; put many powerful people in the crosshairs of looking at prison time. This is financial dynamite for our government's largest required bidder on US Government Debt!
WOW!!! Talk about your conflicts of interests!!!
As the story goes, JPM Chase is the cash custodian for Bernie Madoff. As it turns out, Bernie Madoff’s trading arm cleared through Bear Stearns. Having this unique and sole perspective into both sides of the Madoff scheme, it appears as though JPM Chase had allegedly withdrawn their own funds a few months prior to the Madoff Ponzi scheme being revealed. At the same time, it is alleged that JPM Chase did not advise their own clients to do the same. Apart from this being a breakdown in JPM Chase’s fiduciary duty of acting in their client’s best interest, a move like this would/did accelerate the speed at which the Ponzi scheme unwound. …thus compounding the losses for their own clients. (so not only did they not look out for their own clients, they inadvertently increased the size and velocity of their client’s losses.) If these allegations are true and they still choose to claim ignorance here, then they are still at fault for the direct impact on losses their clients suffered due to their own actions.
Also if true, in addition to not acting in their client’s best interest, there are MASSIVE regulatory rules that would have been broken in doing this. Reporting this finding to the SEC, FINRA, or any other financial regulatory agency should have happened immediately.
If these claims of cash moves turn out to be factual, it is hard to defend any legitimate conclusion that would lead to your company making a full withdrawal from such a “historically reliable” money maker for your bank. Why, even in a credit crunch, would you pull funds from a reliable investor, unless you knew something was up? Why move your cash and not client’s cash? (Was it to distance yourself time wise from the eventual exposure that you know will come sometime in the distant future, but unfortunately showed up sooner then expected, which still left a fresh trail of blood?)
Any claim of ignorance is null, as banks have mandatory caps put in place at account levels to ensure that clients don’t exceed their limits, or expose the bank to negative cash shortfalls (overdrafts). So, in other words, if Bernie was running short on cash…. JPM Chase should have known it. …and if they knew this, they then needed to see his lines of credit. (Which meant checking the Bear Stearns side) If they didn’t check this, then it’s my assumption that they clearly weren’t performing their own due diligence. …but if they did check this as I would suspect, then they were then involved in the greatest insider trade we’ve ever seen. That’s it. You can’t have it both ways. Either, they didn't perform required due diligence (which should destroy their credibility as a financial institution), or they saw both sides of the Madoff scheme, and did what was best for themselves based on inside information that they were only privileged to.
So why would we believe that “we the people” will ever find out the truth? Just look at a simple thing like baseball to give you some perspective. Did Barry Bonds “officially” use Steroids or Performance Enhancing Drugs? If yes, how many games had he been suspended from? How long was he banned for? How many of his records were expunged? How much money was he forced to give back? How much jail time has he had to do? The answers: None, None, None, None, None. It’s like it never happened. Remember, this is just baseball, a silly game, a pastime, and we can’t even get any semblance of justice. So why should we think that “we the people” would ever get to see anything different on Wall Street?
Maybe the lawsuits and claw backs may be able to push hard enough to find out the truth behind what actually went down on the custodial side of the Madoff scam, but I doubt true justice will ever prevail. I doubt that any corporate heads will be held accountable for their actions with regards to this allegation. Instead, we’ll see a 4:59PM news release on a Friday just before a holiday weekend stating: “Bank X has agreed to a fine and will pay Y amount of dollars to the plaintiffs in the Madoff Ponzi scheme in return for full pardon.” (And the kicker will be… That fine of Y dollars will be paid with our taxpaying bailout dollars!!!) The downturn has done nothing but increase the power of those select few who have the power in our current oligarchy.
Power corrupts, oligarch power corrupts artificially!
All the best,
p.s. It’s funny that Martha Stewart did some time in jail for baking a few too many cookies, (and was headline material for quite some time prior to conviction) …but when it comes to something of this magnitude, where potentially top ranking officers at America’s top bank that were doing some seriously corrupt baking (oops, I mean Banking) …it’s funny to see that nothing has been mentioned of this potential daisy chain of corruption?