Federal prosecutors on Tuesday slapped JPMorgan Chase with a $1.7 billion fine for not warning them about Bernie Madoff’s massive Ponzi scheme. The fine will be paid to Madoff’s victims. JPMorgan, Madoff’s primary bank, did not plead guilty but entered into a deferred-prosecution agreement with the United States attorney’s office, which suspends indictment for two years. Federal regulators are expected to announce their own punishment toward JPMorgan, which is expected to pay a total of $2 billion for negligence in the Madoff case. Prosecutors allege that JPMorgan’s computer system raised two red flags in 2007 and 2008, but employees reportedly did not follow up and in fact noted in the file that the transactions did not appear to be unusual.
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