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JP Morgan Seems To ‘Love That Dirty Money’

Posted by Larry Doyle on May 6, 2013 8:12 AM |

If those in my beloved hometown of Boston “love that dirty water,” then similarly current management at my last stop on the sell side of Wall Street, that being JP Morgan, seem to ‘love that dirty money.

The filth and stench surrounding this story runs so high as to have recently influenced JPM’s bedmates — er, I mean regulators — to pronounce that they do not trust JP Morgan management. Wow. That’s saying something.

We know that only 1 in 5 in America trust our banks (down from 1 in 2 a mere 5 plus years ago), but for regulators to now voice their distrust in JPM’s management is a cry from the bedroom not often heard. What’s going on at JPM? Let’s navigate.   

We now learn about another JP Morgan whistleblower who has paid the ultimate price, JPM’s questionable dealings in the electricity market, money laundering, and so much more as The Center for Public Integrity exposes the bank’s devotion to fighting the flow of dirty money. Bring the waders and let’s move downstream.

First stop, let’s meet Jennifer Sharkey:

In the summer of 2009, Jennifer Sharkey was moving in select company. As a Manhattan-based vice president at JPMorgan Chase & Co.’s Private Wealth Management group, she juggled relationships with 75 “high net worth” clients with assets totaling more than half a billion dollars.

Things changed for her, she claims, after she raised doubts about a “suspect” foreign client who had millions stashed in various accounts at the bank.

The client was making questionable cash transfers and concealing who actually owned certain accounts, according to a lawsuit Sharkey is pursuing in federal court in Manhattan. She also found evidence, her suit claims, that the client had falsified financial statements for one of his companies and that he’d been involved in the “unexplained disappearance” of millions of dollars in merchandise in another venture.

After she warned high-level bank officials that the client might be involved in fraud and money laundering, her suit claims, JPMorgan moved to silence her — pressuring her to stop raising questions about the client, assigning her other clients to junior colleagues and, finally, firing her.

Seemingly standard treatment for a whistleblower. Moving right along . . .

In 2011, the bank paid nearly $90 million to settle regulators’ claims that it had violated economic sanctions against Iran, Cuba and other countries under U.S. embargoes.

In January, a consent order from JPMorgan’s main federal regulator, the Office of the Comptroller of the Currency, cited the bank for “critical deficiencies” in its anti-money-laundering controls, including inadequate  procedures for monitoring transactions at foreign branches.

JPMorgan and other major banks have increased their risks and rewards in the offshore world by weaving a web of branches and subsidiaries across places that have been tagged as havens for financial secrecy and criminal activity.

A 2008 U.S. government report found JPMorgan had 50 subsidiaries in Bermuda, the Bahamas and other places labeled as tax havens or secrecy jurisdictions, tied for 11th highest among the 100 largest U.S. companies.

Since then the bank has expanded its reach in some offshore centers. Its tally of subsidiaries in the Cayman Islands grew from seven in 2007 to 20 at the end of 2012, securities filings show. Over that span its subsidiaries in Mauritius — a tiny isle off Africa’s eastern coast that’s been called “a Cayman Islands to India” — grew from eight to 14.

When the topics surrounding Madoff, Enron, and manipulation of electricity markets are broached, once again JP Morgan is prominently displayed.

The bank held as much as $5.5 billion in Madoff-connected cash and, according to court filings by Picard, earned an estimated half-billion dollars from fees and other revenues generated by Madoff’s billions.

Any concerns within the bank about Madoff “were suppressed as the drive for fees and profits became a substitute for common sense, ethics and legal obligations,” Picard’s lawsuit said.

As Enron’s primary banker, did JP Morgan learn a thing or two about manipulating electricity markets? Then how to explain that,

Investigators from the agency that regulates power markets have found a unit of JPMorgan Chase & Co manipulated trading in the California and Michigan electricity markets, the New York Times reported, in what would be the latest government crackdown on trading abuses in the markets.

The newspaper said it reviewed a confidential, 70-page government document that was sent to JPMorgan in March and that also criticized Blythe Masters, the bank’s current head of global commodities and former chief financial officer.

How does all this come to pass? Actually very easily. When bankers own the politicians and regulators they will push the envelope as far as they possibly can. When revenue streams in other books of business decline, then the questionable activities and double digit returns within the dirty money are accentuated.

As was then, is now, and forever shall be UNLESS and UNTIL the pols and the regulators are forced out of the bankers’ bedroom.

I can only chuckle thinking that JP Morgan’s chairman and CEO Jamie Dimon is stealing a page from Washington’s handbook and will try to shovel away a lot of this dirt by soon hosting a town meeting with the junior staff of the OCC. What a joke.

If they took out the banking systems and put in sewing machines, the Department of Health would likely shut the place down.

Navigate accordingly.

Larry Doyle

Isn’t  it time or overtime to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Peter Scannell

    Who the hell is the General Counsel of JP Morgan Chase – the position would require his stamp of approval on all this debauchery?

  • LD

    New York, December 12, 2006 – JPMorgan Chase & Co. (NYSE: JPM) announced today that Stephen M. Cutler will be appointed Executive Vice President, General Counsel and head of the company’s Legal and Compliance activities worldwide, effective February 2007. He will report to CEO Jamie Dimon, and will also join the firm’s Operating Committee. Mr. Cutler succeeds Joan Guggenheimer, who died earlier this year.

    Mr. Cutler, 45, joins JPMorgan Chase from the law firm of WilmerHale in Washington, D.C., where he is a partner and co-chair of the firm’s Securities Department. Before joining WilmerHale in 2005, he was Director of the U.S. Securities and Exchange Commission’s Division of Enforcement during some of the most active years in the agency’s history. While at the SEC, he oversaw 1,100 employees and led the agency’s investigations of numerous financial reporting matters, as well as its actions involving exchange specialists, research analysts and mutual funds.

    Jamie Dimon said, “I am very pleased that Steve Cutler will be joining JPMorgan Chase in this critically important role. He will be an excellent General Counsel and a key member of our senior management team.” Mr. Dimon added that “Steve is a strong leader, noted for his integrity, distinguished service in the public and private sectors, and outstanding reputation in the legal and regulatory communities.”

    Mr. Cutler added, “I am delighted to be joining JPMorgan Chase, a leader in global finance and a truly dynamic organization. This is an exciting opportunity for me to join a wonderful group of people, and I’m looking forward to working closely with Jamie and his team.”

    Prior to joining the SEC in 1999, Mr. Cutler was a partner at the law firm of Wilmer, Cutler & Pickering in Washington, D.C., where he worked for 11 years. Before his time at Wilmer, Cutler & Pickering, he served as a Visiting Fellow at the Center for Law in the Public Interest in Los Angeles and a law clerk to Judge Dorothy Nelson of the U.S. Court of Appeals for the Ninth Circuit. Mr. Cutler received his B.A. summa cum laude from Yale University, where he was also a member of phi beta kappa, and his J.D. from Yale Law School, where he was an editor of the Yale Law Journal.

  • Tim Favero

    I believe that there is more to the J.P. Morgan and Blythe Masters energy trading that is more damning than the NY Times report.

    Will JP Morgan’s Enron be the End of Blythe Masters?

  • ed pefferman

    Nice to see your article on JPM.

    Is it possible that FERK regulators are putting the
    “squeze” on Blythe via. perjury,obstruction and
    individual liability charges in order to get her to
    “out Jamie” on a more substantial charge. Like being
    “an accomplice of Madoff’s”. That would sure beat a
    mony laundering case. The Banking Oligarchy is pretty
    upset about that little fiasco.
    Wonder just what Blythe knows about it?
    Just a thought.

    • LD


      I think Jamie is “untouchable.”

      In fact, I think the steady exit of execs from JPM over the last months has likely been induced from regulators as an indication to Jamie that he had better start cleaning the place up.

      Funny form of justice but that’s how it works.

  • Matt

    As a former manager on wall Street, I trained my staff to look for tell-tale signs of money-laundering. I was told that failure to do so was a criminal (not civil) violation.
    I guess the word “criminal” only applies below a certain income and management level!

  • Ted

    How about some of this sound?

  • ed pefferman

    I one would assume that FERK would have “run it by
    Holder” before going after Blythe.


  • Peter Sivere

    I have got to believe at this point that JPM ranks #1 in league tables for firing whistleblowers.

  • Peter Sivere
  • Jim Wells

    Just last month, JPMChase added another dubious distinction when Italian police raided the bank’s offices in Rome in regards to its relationship with Monte dei Paschi di Siena. In March, Chase won a judge’s ruling letting it escape prosecution for rigging silver contracts between 2008 and 2011. In 2011 and 2013, Chase was fined for bid-rigging of municipal securities auctions. And US regulators have yet to prosecute the bank for its participation in the Libor-setting club.

  • Peter Sivere

    This is going back to 2004. Greg Merdith mentioned in this article still works for JPM.

  • Peter Sivere

    At one point, prosecutors contended that a senior Chase official lied to a state regulator to cover for Beacon Hill. After Beacon Hill’s lawyer told state banking officials at a meeting in January 2001 that XYZ planned to bank at Chase, a Banking Department lawyer, Sara Kelsey, followed up with Chase’s compliance chief, Greg Meredith. Mr. Meredith “deceitfully confirmed that the business was not yet in operation,” according to grand-jury minutes described in a memorandum of law submitted by Mr. Morgenthau on Oct. 21, 2003, as part of the Beacon Hill case. Mr. Meredith told Beacon Hill it would have to hire an outside consultant to review its regulatory compliance, according to a filing by prosecutors. Although Chase wanted an audit of Beacon Hill, its owner, Anibal Contreras, restricted the outside consultant to a review of its policies and procedures, the filing said.

  • Peter Sivere

    This appears to be Ms. Sharkey’s U-5 from FINRA Broker Check. I am curious to know if she was fired why her U-5 is “clean?” JPM has a history of terminating people and filing false or misleading U-5’s as not to bring attention to themselves. I wonder if FINRA has looked into this matter.

    FINRA BrokerCheck® – Research Brokers, Brokerage Firms, Investment Adviser Representatives and Investment Adviser Firms

  • Ed

    Sometime soon Jamie Dimon will be asked to appear before a Senate Rackets Committee, and some member of Congress will say to him, “Your bank is now wanting to use the FDIC to guarantee the billions of dollars that have disappeared from client accounts at JP Morgan Company. What do you have to say about these missing billions?”

    And Mr. Dimon will reply, “These were invested using the Jon Corzine principles of fiscal management. Turns out we are missing about 5 billion dollars and we can’t seem to locate where it went and to whom. But that very small portion divided by the 200 years of age of our bank, works out to be only about $25 million per year, and if we change the minus sign to a plus sign, you can see we have really been earning a lot of money….!”

  • ed pefferman

    Who is Irving Picard?


    • LD


      Irving Picard is the trustee appointed to settle the Madoff claims utilizing a policy approach of determining net winners and net losers despite the fact that the Securities Investor Protection Act maintained that clients should be protected up to 500k.

      Here is a link from the Madoff Recovery Initiative.

  • ed pefferman

    When did they raise it to $500,000?


    • LD


      To the best of my knowledge it has been at that level for a long time.

      Here is a link to SIPC that provides more than you might ever care to know about this organization and what it does and does not do.

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